There are many avenues open to producers who are trying to raise finance for their films, securing funding is on the other hand another matter. When raising finance for your film you will generally be looking for it in two tranches; Development Finance and Production Finance.
Development Finance
Getting that all important helping hand during the early stages of a project can sometimes be the most difficult source of funding you will ever have to raise. Having raised finance for other projects in the past - that has been my experience at least! In other industries this stage of finance is often called 'Start-up' or 'Seed' capital.
The film equivalent is called 'development funding' and is used to develop your idea into a fully polished proposition that an investor can evaluate. You will then aim to raise Production Finance on the strength of your proposition. As you might imagine on a feature film, the Development Finance makes up only a fraction of the total funding raised. Investors that would typically put up the Development Finance include the Producer themselves, friends, family and people from your close network. They might invest because they believe in you, believe in your idea or have some desire to be involved in an exciting and unusual project. They will and should expect a decent return on their investment because quite often they take the biggest risks. Investors bank rolling the Development Phase will expect to recoup their initial investment along with a 50% uplift on their stake. In other words if someone invests £1,000 they will expect to get this back and another £500 for taking the risk. Investors will recoup their Development funding from the Production Funding and might also be given option to roll their stake over and/or contribute further to the Production pot.
As a Producer you should also be clear to your investors when they can anticipate receiving their return because if your plan is to start looking for Production Finance in 15 years when the idea is fully developed that might not seem like such a good rate of return! It also helps you to focus your mind on an end goal.
So what do you do spend your development money on?
Here are some of the cost items that will come under your Development Budget;
•Script option fees
•Writer's fees
•Producer's fees (the most important one!)
•Travel & Entertainment
•Location scouting
•Budget & scheduling
•Script reading with cast
•Script editing
•Duplication & postage
•Website
•Legal (yes they get involved early!)
•Casting Director
•Director final script
•Office overheads
..the list goes on but you get the idea, there is a lot to think about. You will have noticed at the top of this list I referred to the Development Budget and the reason for this is simple. When planning any project it is crucial to be aware of any and every potential cost that one might incur and budget for this in your financial plans and cash flows. It doesn't necessarily mean that you will end up spending or indeed be compelled to spend every penny of it, so for example it might be desirable to receive a Producer's Fee whilst developing your idea. The reality however is you would normally forego this fee or at least an investor is likely to expect you to do that. Unless of course you can provide sufficient reasoning and justification for it's inclusion, otherwise be prepared to compromise.
So what's the lesson?
Lesson No. 3# Get as far down the track as possible before you ask anyone for any money - doing this will demonstrate to any investor your initiative, commitment and work ethic.
