How To Find Movie Investors

A lot of filmmakers are looking for movie investors.

Many of these filmmakers are looking for movie investors in the wrong place.

Living here in Hollywood, I can tell you that most hopefuls hold the misguided belief that there is some secret list of movie investors who can’t wait to hand over hard earned cash to filmmakers. And the truth is, these places exist. And they aren’t so secret.

Ready?

The popular movie investors are Universal, Paramount and Fox.

The problem is, everybody wants a piece of their action. And while navigating the studio system is one way to find movie investors, it’s impracticable and slow for most newbies.

Instead I would invite you to look elsewhere. While it’s true that many movie investors are here in LA, there are prospective business investors in just about every state and every country on earth. In fact, according to this article in LA Times, there are now 9.63 million millionaires in the United States.

This means you don’t have to look very far to find, introduce yourself and build business relationships with people who could conceivably invest in your movie.

Movie_Investors

How To Find Movie Investors

The challenge in finding movie investors is taking time to reach out through your network and find out who you need to telephone. And assuming you get traction, your next goal is to convince a traditional investor that joining the bandwagon of movie investors is a good idea.

There are two tools you can use to find movie investors.

  1. Your network.
  2. Your telephone.

When I tell you to leverage your network, I mean just that. You may not know this, but you know someone who knows someone who has enough money to be considered an accredited investor.

Once you locate a prospective movie investor, your next goal is to grab your phone, call their professional office and ask for a meeting. This is known as a cold call.

While this type of telephone prospecting can feel scary – Take comfort in the fact that your prospective investor gets these types of pitches every day.

In fact, what we are talking about is similar to any entrepreneur working to get a start up off the ground. Your start up just happens to be an indie film. And like any start-up entrepreneur, you are approaching prospects (prospective movie investors) who are new to filmmaking.

From their perspective, you, your movie and your movie business is a new concept. As a consequence, many of your first meetings will be spent educating and building trust. And this could mean a very long process.

It is during this time that many filmmakers give up. They pull-the-plug on prospecting too early, lose momentum and fail to get their movie funded.

I am sad to say this, but many filmmakers will quit at the first challenge.

Maybe you make a telephone call to a prospective movie investor and he fails to return the call. Or you get hung up on. Or his assistant says “he’s in a meeting.”

Maybe it’s something else…

And if you have never cold-called a prospect before, you may give up before you even start.

Crowdfunding To Prove Your Concept

One of the reasons prospective investors do not invest is because of risk. Even though you are convinced your movie will be the next Paranormal Activity, many movie investors may think differently.

Odds are good they are comparing your movie to other, less risky investments like real estate or the stock market.

To mitigate your risk, you will need to include elements that attract an audience. I talk a lot about this in my guide to distribution. But for the sake of this article, it’s important to know that having “name” talent as well as a clear marketing plan can help put prospective movie investors at ease.

The other part of your initial plan should involve crowdfunding. Crowdfunding allows you to pitch your movie ideas to crowds of people online, who are enthusiastic about sponsoring movie projects.

Many filmmakers try to raise their entire budget via crowdfunding and fail. I do not recommend this. Instead, consider limiting your crowdfunding campaign to a few thousand dollars.

Why? Because if your movie has a real budget, you are going to need real money outside of the crowds. In this context, the more important reason to utilize crowdfunding is to test your movie concept and source your initial audience.

Going into a pitch with a prospective movie investor is much stronger with a successful crowdfunding campaign under your belt.

“We just tested the concept and essentially pre-sold over one-thousand units!”

A successful crowdfunding campaign allows you to prove there is an interest for your movie in the marketplace. And because you have already garnered a few thousand dollars, you now have a much greater incentive to finish what you start – You wouldn’t want to let your sponsors down, right?

While there are no guarantees in business, especially the independent movie business – having the ability to test your concept, source an initial audience and set up shop in the many popular video on demand marketplaces might just help you move prospective movie investors to invest now, instead of later.

If you would like more information on how to find and build relationships with prospective investors, you might want to check out my get movie money guide. In the guide, you will get valuable step-by-step tips on how to build relationships with rich and successful people in your home town. Find out more here.

How To Make People Line Up And Beg To Invest In Movies

Do You Invest In Movies? That is the question. And here’s the thing…

People who invest in movies aren’t necessary eager to hear unsolicited pitches from uninformed, inexperienced filmmakers.  The reason for this should be obvious.

But just in case you need some clarification, investing is a business. People who invest in anything do so because they think the reward will far outweigh the risks.

In other words, these people invest because your offering is more appealing than say, buying a stock mutual fund that grows on average 12% per year.

Invest In Movies

Do You Invest In Movies?

Finding people who actually invest in movies requires that you think about your project from the point of view of the investor. What’s in if for them? Why should they invest in movies over other investment opportunities?

But Jason – No more of this business talk. I just want to find investors the easy way!

That’s your problem.

And I get it.

It is far easier to search the internet for people who invest in movies than to actually scour your network for people who may be able to offer you a personal introduction. A personal introduction that could lead to a face-to-face meeting, that could lead to the money.

If you’re serious about finding people who invest in movies, you must realize that business largely depends on trust. And trust is a result of personal relationships. And you usually don’t build strong personal relationships without occasionally picking up the phone.

As an example of what not to do, sometimes I get some wacky emails from people asking me to invest in movies.

Dear Jason,

This is my third and final eMail to you. I think it’s silly that you have a filmmaking website, but when it comes time to actually help people make movies, you just ignore them… So here it goes – again!

My name is [removed] from [another planet]. I think you should invest in movies I want to make because my ideas are totally awesome. My friends and I are going to do everything – so all we need from you is the money…

I am thinking our budget is going to be eighty-thousand dollars, but I am really not sure. But we think you should help us because you know all that stuff about film distribution. ( We don’t care much about that stuff, ha-ha!)

Assuming that you do invest in movies (you don’t want to miss out, right?) – We are prepared to give you all international rights. So again, just 80K will make you as a producer. Sound good?

You can send the check to my return address.

Sincerely,

Mr. [Name Removed]

P.S. If you pass at this opportunity, it’s your loss. But if you find other film financier for our project, we will still give you an associate producer credit.

P.P.S. What is your personal phone number? I’d like to call you with more details.

This note was modified and slightly embellished to protect this unprofessional “filmmaker.”

Much of this probably seems funny. But these types of unprofessional solicitations are not rare. I get at least three emails like this per week.

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And here’s the thing, if you’re looking for people who invest in movies – it starts with your network. It starts with a business plan and a clear plan for making your movie make sense to people who invest in movies.

If you’d like more information on how to find and build relationships with investors, check out the film finance guide.

 

How To Finance Movies With VOD Sales Projections

Do you know the most popular question filmmakers ask me?

I’ll give you a hint. It has to do with video on demand.

Ready. . .

Without too much variation, the most popular question is: “Can you provide some VOD sales projections?”

I understand the motive behind this question.

Believe me, I do.

You’re a filmmaker. You either made an awesome movie and you’re trying to use VOD sales projections to convince your partners that VOD is the way to go. Or you are in the process of making a movie and you need to convince your investors that VOD is awesome. In both scenarios, you’re trying to find proof that movies make money in VOD.

I get that. . . But. . .

Let’s make one thing clear. Asking for VOD sales projections is asking the wrong question!

If you dig around, examples of VOD Sales successes are out there. Check out what The Polish Brothers did. And if that’s not enough, Google the case study around Indie Game the movie.

But the truth is, one filmmaker’s past success does not guarantee that your movie will be successful.

Read that statement over and over again. And if you need a little more clarity, take a look at what the cat is saying here:

VOD Sales Projections

Realizing that VOD sales projections are BS is essential for your success. And I am going to explain how you can use your new found understanding for good, very soon…

But before I go there, let’s talk about why people invest in independent film.

Why Investors Invest In Indie Film

Independent movie investors invest because (aside from having an appetite for risk and an interest in the film business) most of these people want a return on their money. If you are doing things by the book, you probably created a marketing strategy as part of your business plan. This plan provides prospective investors an overview of how investment dollars will be budgeted, spent and hopefully recouped.

In the past, trying to convince investors movies were a good investment involved projecting returns based on speculative data. To guess how much money a movie may make, filmmakers would compare their project to other successful movies.

Creating indie movie comparables is complete BS.

The reason for this is simple.

Just because you make a low budget horror movie does not guarantee your movie will have the same success as Paranormal Activity.

In fact, Paranormal Activity is an outlier. It is not a fair comparison. And using breakout hits as examples, while ignoring the thousands of unsuccessful horror movies made each year, is short-sited at best and I dare say a little unethical.

Video On Demand Sales Projections

Given the birth of VOD distribution, as a filmmaker you now have the ability to access and enter into a non-discriminatory marketplace as soon as your movie is ready. And because many of these marketplaces exist online, much of your sales will come from internet traffic.

This is actually awesome news.

It means that you can boost your sales by using a very common marketing concept called…

[Seriously… Are you ready? You are about to receive the secret sauce of modern, indie movie marketing.]

More important than VOD Sales Projections is:

Conversion Rates

What is a conversion rate?

Conversion Rate Defined, According to Wikipedia:

Your conversion rate is the proportion of visits to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators.

Conversion_Rate

In other words, if you send one-hundred people to your movie website and two people buy your movie, your conversion rate is two percent. This is profound. This is life changing for indie filmmakers!

Question: Why should filmmakers be enthusiastic about the internet marketing, nerd concept of conversion rates?

Answer: If you know your conversion rates, you can model and potentially project more accurate movie sales projections from day one.

But before you start noodling around to find your conversion rates, it helps to answer the following questions:

Modern MovieMaking Model

  1. Who Is Your Target Audience?
  2. How Large Is Your Target Audience?
  3. How Will You Reach Your Audience?
  4. What Is Your Marketing Strategy?
  5. How Many VOD Sales To Break Even?

While I won’t get into the actual mechanics of marketing and selling your movie here (My Action Guide How To Sell Your Movie provides you with an actual step-by-step plan for getting your movie seen and sold), I will simply note that a marketing plan must now be included with your business plan.

The Secret VOD Sales Projection Formula

When you create (or refine) your marketing plan, you must now include some marketing math.

Truth be told, math is a weak subject for me and I dare say, most of the filmmakers I know. But luckily there are many spreadsheet templates that allow you to test several conversion rate scenarios. You can use these scenarios as a guideline to ballpark the potential ROI for your movie.

Here is a basic website conversion rate calculator you can utilize: http://bit.ly/17TSCrt

Before you get overly excited (like I am) calculating your movie website conversion rate is only one metric to determine your movie’s potential for profitability. You still need to figure out how to price your movie. And at the same time, you will need to determine how much targeted internet traffic will cost you.

Generating Internet traffic is the result of executing four strategies. You can either get free traffic online, free traffic offline, paid traffic offline or paid traffic online.

For the sake of this example, I am going to incorporate pay per visit advertising. With pay per visit advertising, you simply pay for someone to visit your movie website.

One example of Pay Per Visit traffic is StumbleUpon. It’s a social bookmarking site that also allows you to pay for semi-targeted traffic. This works well if you have a movie with a dose of controversy and a strong hook.

And again, if you’d like more info on specific traffic generating strategies, check out my indie guide to distribution.

Ok. Here is our first example…

Let’s assume only 1% of the targeted folks who actually visit your website, buy. Then how many visits will you need to sell 100 units?

100 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100 units if only 1% buy.

(X).01 = 100 units
EQUATES TO: X= 10,000
THEN 10,000($.05) = $500 paid for targeted traffic.

So in other words, if you were lucky enough to get a 1% return, you just paid $500 dollars in pay per visit advertising to sell 100 units of your movie. But let’s go one step further. Let’s assume you’re like me – and you hate order fulfillment and shipping. So you decide to let a company like Amazon’s Create Space or iTunes (or some other popular marketplace) handle your order.

Video On Demand For Rent (Electronic Sell Through)
100 units ($3) = $300 – 50% paid to marketplace = $150
minus $500 paid for advertising = -$350 NEGATIVE

In this VOD rental scenario, the Pay Per Visit Ad numbers don’t work, unless you like losing money.

Video On Demand For Download (Electronic Sell Through)
100 units ($10) = $1000 – 50% paid to marketplace = $500
minus $500 paid for advertising = BREAK EVEN

In this VOD download to own scenario, the numbers work a little bit better. Assuming you’re lucky enough to get 1% of your money returned, at least the advertising pays for itself. But unless you can increase your conversion rates, pay per visit advertising is going to be very difficult method for returning money to your investors.

Physical DVD Sales
100 units ($20) = $2000 – 50% paid to marketplace = $1000
minus $500 paid for advertising = $500 in profit.

Ah ha! If you’re fortunate enough to get 1% return on your pay per visit advertising, you can see how physical DVD’s (or units) sold at $20 dollars may offer a slight profit margin. In other words, in this scenario, for every $.50 cents you spend, you get $1 dollar back.

So let’s tackle the bigger problem. Let’s try to get a return on our 1Million dollar movie, selling physical DVD sales and using pay per visit advertising alone:

Movie Budget = 1 Million dollars
Physical DVD Sales using Pay Per Visit Advertising

$1,000,000 divided by $20 per unit = 50,000 Units

Since we will give 50% to the marketplace for all sales, we will need to project for double our budget.

100,000 units = Our goal for this ad campaign.
$.05 = Amount you may pay advertiser per visit.
X = Number of Visitors Needed to buy 100,000 units if only 1% buy.

(X).01 = 100,000 units
EQUATES TO: X= 10,000,000 (Yes, TEN MILLION people.)
THEN 10,000,000($.05) = $500,000 paid for targeted traffic.

100,000 units ($20) = $2,000,000 – 50% paid to marketplace = $1,000,000
minus $500,000 paid for advertising = $500,000 in profit.

So to break even, you would need to sell 100,000 units and make $2,000,000.

Some Sales Conclusions

Based on this scenario, as a filmmaker you will (obviously) need to expand your promotion beyond pay-per-visit advertising!

But importantly and most AWESOMELY, you can treat your movie business like any other small business. With VOD Sales projections, you can find the marketing formula that works for your movie and crunch your numbers until you find a scenario that brings you profits.

Create a plan that included your marketing costs in your budget.

While there are no guarantees in any business, having a plan for marketing, sales and distribution sure beats the old days when your only plan for ROI involved crossing your fingers in the hopes someone will offer you a profitable, traditional deal.

While these may not be the VOD Sales Projections you were looking for, hopefully you now realize the power of knowing your conversion rates.

Treating your movie business like any small business simply means you don’t have to ask permission. You can make your movie NOW! And your prospective investors might take notice…

Also, can you do me a favor? If you liked this filmmaking article, could you kindly retweet or share this article with your friends?