Raising Film Finance Rule No. 1 - There are no rules! (Well one or two..)
The second module in my 'How to Produce a Feature Film' class was all about Film Finance. As an aspiring producer this subject is close to my heart and one that has really interested me from the very beginning. As any Producer will no doubt testify, this subject is vast and complex (or is that just me?) I could quite easily devote an entirely separate volume of blog entries on the ins and outs of film finance, in fact I might well do that .
So after numerous aborted attempts to write a succinct and coherent post on this subject I decided to break it down into easily digestible chunks if not for your benefit then definitely for mine;
Starters
- Types of Film Finance
- Sources of Film Finance
Main
- Recoupment
- Financing Models
- Cash Flow Projections
Side Orders
- UK Film Tax Credit
- Garlic Mushrooms
Desert
- Sales Agents
- Sources of Revenue
- Maximising Producer's Profit
I appreciate that for most seasoned Producers all this stuff is second nature. So if you happen to fit into this category of Producer and stumble upon this and are able to add your comments, or maybe you view things differently - then I'd appreciate your counsel. I'm most curious to discover how the reality of avidly searching for film finance will compare to what I learn in the classroom and through books. I'm guessing that it's going to be somewhere in between.
So onto the basics of Film Finance.
Broadly speaking in the UK there are two different types of film finance; Soft Money and Hard Money. Soft Money relates to finance that either doesn't need to be recouped from sales revenue or at the very least has relaxed and highly flexible terms of recoupment. Soft funding can come in the form of grants and subsidies, crowd sourced finance and film tax breaks. I'll say a bit more about these later. Hard Money relates to finance that will need to be recouped from sales revenue and often accompanied with an uplift of some sort. So examples of Hard Money include, equity, bank or gap finance.
And I guess this was the first thing to throw me - 'What, free money- you've got to be joking, there must be a catch!' How can you move into net profit when your revenues are less than your capex? I've read about the peculiarities of film finance and now I understand how this one works. It's official, in UK Film Finance there are certain avenues of finance a Producer can exploit to enhance the profitability of a project.
Lesson Number 2# THE MORE SOFT MONEY YOU CAN RAISE THE SOONER YOU MOVE INTO NET PROFIT
I'll be revealing more about film finance and the vast array of UK Film Finance sources in the next post.
