It’s never been more possible for YOU to become a filmmaker.
Accessible cinematic cameras, groundbreaking advancements in visual effects, and the rise of streaming platforms for distribution have smashed the barriers to entry in the film industry. With the power of the internet, filmmakers can connect with fans, co-producers, and investors anywhere in the world.
When Everything Everywhere All at Once – made by independent filmmakers who trained at “YouTube University” – swept seven major 2023 Academy Awards, it proved that the industry is settling into a new era.
Independent filmmaking is possible in ways it never was before. But it’s still not easy.
Making a movie still takes money.
The average quality of indie films is skyrocketing – especially as actors’ and writers’ strikes turn seasoned industry pros toward indie projects. So, to keep up with the competition, you may need quite a lot of money. The gates of Hollywood are crumbling, but you still need to climb over the rubble.
In this article, we’ll look at the ways film finance is rapidly shifting and look at how you can get the funds you need to become a filmmaker.
What is Film Financing?
Film financing is basically the pile of money – or promised money – that a producer secures to make a film. It can come in the form of studio backing, distribution deals, private equity investments, bank loans, grants or tax incentives, or any combination of the above.
Sometimes, especially for small independent projects, the biggest chunk of cash comes from the filmmaker’s own pockets and those of their family and fans.
Why You Need Film Financing
Financing has, of course, a huge impact on the final quality of your production. It’s not just about buying an ARRI or RED camera, renting 10lb lenses, or getting enormous china ball lights. Your budget affects all aspects of planning, production, post-production, and distribution, including but not limited to:
- Paying your cast and crew
- Professional screenplay review
- Shooting locations (whether real or virtual)
- The complexity of scenes and stunts
- Quality and detail of wardrobe, HMU, and props
- Whether you shoot digitally or on film
- Sound design and effects
- Original music score composition and music licensing
- Marketing and networking for distribution.
- Insurance and legal protection
Having a bigger budget means you can plan more (and more efficient) shooting days, giving you time to get all the angles and inserts that give your film a cinema-quality polish.
It means you can hire a skilled and experienced crew – so you aren’t trying to direct your actors, frame a shot, pull focus, hold a boom mic, and move lights all at the same time. (Believe me, I’ve been there!)
Last but not least, your budget will directly affect the caliber of the directors or actors you can attract to your project – which, in turn, can lead to better financing.
Understand the Current Film Financing Landscape
Films backed by major Hollywood studios can have mind-bending budgets.
According to IMDB Pro, the recent biopic Oppenheimer (2023) by Universal had an estimated budget of $100,000,000.
If that sounds like a lot, check out the estimated budget for Indiana Jones and the Dial of Destiny (2023) by Disney. It was almost three times that of Oppenheimer, at $294,700,000.
And – just in case you were counting zeros – yes. That’s nearly three hundred million dollars.
Of course, those two films are huge “tentpole” productions for major Hollywood machines. Their budgets have been rigidly calculated, and their production is formulaic. Those with jobs on MPAA pictures say that, with all that money behind them, there’s very little artistic wiggle room for anyone working on blockbuster films.
Where does all that money come from?
How are Studio Films Financed?
It’s every teenage filmmaker’s dream, right? Draft a masterpiece screenplay. Get it in front of a Hollywood producer. Have it picked up by a major studio. Secure your star on the Walk of Fame.
Maybe, rarely, that still happens. But, as a filmmaker, that may not actually be the big break you hoped for. Contracts could be written in such a way that, as the screenwriter, you never see “profits” from your studio-backed script.
That’s because the most distorted beasts that Hollywood has ever given birth to aren’t those flashed across the screens of Godzilla or Creature from the Black Lagoon.
They’re film finance deals.
In theory, the three major types of film finance are:
- Private equity film financing. This means that investors get a stake in the company, a say in how it’s managed, and a share in the profits.
- Debt financing. This means that an investor (such as a bank or film finance company) will expect their money to be paid back with interest but won’t interfere too much with the film’s production or expect a percentage of the profits.
- Financial assistance. This can take the form of film grants or tax incentives that you may need to fulfill certain criteria (such as filming in a specific location) to receive.
But real-life funding agreements for most films involve a complex web of financial arrangements as multiple sources contribute to earning a project the green light.
“Gap financing” refers to a loan taken out against the value of distribution in a film’s unsold territories. This is a risky investment since no one can predict box office performance, but it’s a piece of the puzzle for many Hollywood or larger independent films.
A “Negative pickup deal” happens when studios agree to purchase rights to distribute a film at a set date after completion, but the production company remains on the hook for getting the picture made. With a negative pickup contract, filmmakers can use the purchase agreement as collateral to get a loan for production. But they usually defer paying as many costs as possible until after the purchase date, sometimes including their responsibilities to actors, the director, or producers.
“Slate financing” is when studios or film finance companies approach investors, asking them to invest in a “slate” or portfolio of film and television projects so that they can spread out the risk.
Funding a film is anything but straightforward – and it’s safe to say that most investors who are in it solely for the ROI stay far away from the film industry.
Why Do Investors Hesitate to Finance Movies?
Film financing is difficult because movies are ridiculously expensive to make, and the entire film must be finished and marketed before it will see any kind of return. Then, even once it’s finished, it’s not guaranteed to be a box-office success or make money at all.
Distribution methods and revenue streams from finished films are rapidly changing in a post-pandemic economy, making investors more hesitant than ever to get into film. Box office sales in the U.S. and Canada were 7.37 billion in 2022, still only 62% of the pre-pandemic high of 11.89 billion in 2018.
The popularity of subscription streaming services is pushing studios to churn out content faster than ever, with highly anticipated movies skipping the cinemas and being released as PVOD (Premium Video on Demand). This can mean that the market share for each production is lower.
Sales from licensed merchandise remain an important part of how studios like Disney or Warner Brothers recoup funds they outlay to make certain movies – but that obviously is a long-haul strategy.
Another reason that film finance is so complicated is that major studios use, shall we say, unique bookkeeping systems that often leave either investors or film producers without a worthwhile return.
On the books, Men In Black has not made a single dime since being released in 1997, despite being a runaway hit. So if you do sign with a major studio to produce your movie, make sure you and your investors read the contract very carefully.
Trends in Independent Filmmaking
As precarious as investing in a blockbuster film can be, investment in an indie film is even more of a gamble.
Of course, there’s a huge range in the scope of independent films, but a typical indie production has a budget from $50,000 to $5,000,000. An independent film has a much lower production budget than a Hollywood picture, but there’s also a less clear path to making it profitable.
Indie films usually have fewer professionals involved in budgeting, marketing, and research, which would help investors determine whether or not the project is likely to be a success.
It can be extremely difficult to interest investors in indie films based on the promise of a monetary ROI. Some will back a film because they believe in the cause behind it, but there are so many “passion projects” seeking funding that the airspace is saturated with requests.
Some say that crowdfunding, too, has passed its heyday. Crowdfunding, of course, happens when a producer requests donations – large or small – from a community of fans, friends, and patrons to complete their film. Crowdfunding can still be effective in the 2020s, but you must stand out from the competition. More on that in a bit.
But What About Film Financing Companies?
Sure, you might say, most investors will hesitate to go for indie films, but aren’t there film financing companies?
Well, yes, but they might not be what you think. “Film Financing Companies” are a broad category of entities that serve different functions in the filmmaking industry. Some provide loans. Some function as producers or agents that help you do the homework to find private investors.
Some companies will offer funding to finished productions to get them into distribution. But, unfortunately, few are sitting there just waiting to hand cash to budding filmmakers.
It’s not hopeless, though. Great independent filmmakers are getting funded every day, and the rest of this article will offer suggestions for how to take your place among them.
When Should You Seek Financing?
As we just mentioned, there are some final-mile investors that will sign on to a finished film and help get it into distribution. But most of the time, investors want to sign on early in development.
They may want to give input on the story, production quality, marketing, or people involved in the project in exchange for their investment. This is why we highly recommend you nail down your funding before producing anything more than a proof of concept for your indie film.
What To Do Before Seeking Film Finance
Set Realistic Expectations
Not going to sugarcoat it – film financing is hard. And, as you will hear several professional filmmakers share in the video below, it usually takes a long, long time. You may need to adjust your expectations if you want to get your project made.
If you are set on getting your dream project made just as it appears in your imagination, you may have longer to wait than if you are willing to flex on some things. Most everyone that gives money to your film will have opinions about the script or the execution.
You may find someone willing to invest if a certain actor is involved, or if you make some story changes, or if it is set in a particular location they want to promote. It’s not uncommon for a potential co-producer to suggest taking the film to a whole different genre (perhaps a modern-day romance rather than a historical horror flick) to save on costs.
If you can see constructive criticism as a good thing, your project may get to production faster and be more marketable in the end. But, even if you are willing to be flexible, you’ll almost certainly get more “no’s” than you can count in your fundraising journey.
To quote Academy Award-winning screenwriter Spike Lee, “You just have to be inventive. Look under every nook and cranny to get it done.”
Develop a Compelling Pitch Package
Since the competition for investors’ attention has escalated so quickly in recent years, your pitch has to be extra convincing. Many investors have already tried film financing – and it only takes getting burned once to make them swear they’ll never try it again. The days are past when investors will throw money at a passion project or film concept.
Investors in the 2020s want to see pitch packages with complete screenplays, proof of concept trailers, market research, careful business plans, and clear paths to execution. In other words, you need to show them – not just tell them – that you’ve already invested significant resources in making this project happen.
Your pitch package will need to include a written synopsis and business plan – but make sure to include great visuals as well to prove you’re capable of producing a visually compelling project.
Write a Head-Turning Screenplay
A complete, full-length script will prove that your film isn’t going to just die in the writer’s room. Compelling characters and story arcs may capture your potential investors’ attention and convince them it’s a story that your audience wants to hear.
It will also help them estimate realistic costs for production and evaluate how realistic a film’s budget is. In other words – can they trust your business plan and expect to see a return on investment?
Create a Realistic Budget & Business Plan
Sometimes, people of passion have dispensable money. But, more often, people with money are people who like numbers. You need to treat your filmmaking venture like a startup business.
Develop a clear and reasonable budget – including being ready to talk about points at which you’re willing to flex (e.g. locations or stunts) to save money. Your budget needs to include a plan for marketing and distribution in order to convince investors that it will be a profitable project to support.
Decide on Your Pitch Perks and Promises
Your pitch package should communicate clearly to investors what’s in it for them. What financing model do you think will work best for your production company? Are you going to offer investors a share in the profits or an interest-based return?
Perks don’t have to be just monetary. They can be promises of fame and glory or simply fun. Will you offer your investors “producer” billing? Will they get to meet your actors, hang out on set, or attend red-carpet events (assuming you make it that far)? Will supporting your film make a positive difference in the world or bring awareness to a worthy cause?
Assemble Your Production Team
Unless (maybe) we’re talking about a simple animated short, you can’t make a movie alone. Remember what we said about directing, holding the boom, and pulling focus at the same time? What about feeding your actors? What about set dressing? What about administrative tasks like tracking every penny that goes into production? What about sound design and other elements of post-production? What about marketing and PR?
Obviously, you don’t need to have every hand signed on before approaching investors. But you should have a core group of experienced and committed film professionals (perhaps a lead actor, a director, and a business manager) and a clear understanding of the crew you will need to hire to finish your film, and how much you will plan to pay them.
Pro tip: consider adding legal counsel and a distribution agent to your team, especially if your film project deals with sensitive topics or is shooting for theatrical release.
Gather Social Proof
If you have a completed screenplay, submit it to festivals or competitions. Awards and accolades won’t guarantee you success in film financing, but it doesn’t hurt to have a recognized third party vouch for the quality of the story!
10 Potential Sources of Film Financing For Indie Filmmakers
Since we just covered how to convince private investors to back your film productions, let’s look at private types of funding first – as well as bank loans like gap financing and debt financing. Then we’ll chat a bit about soft money like crowdfunding, product placement, film grants, tax incentives, and other sources of cash available to filmmakers.
Individual investors may be companies or high-net-worth individuals looking to diversify their investment portfolio or support causes they believe in. If they are well-known, their support can lend credibility or visibility to your project.
Your investors will expect a “private placement memorandum” that explains what you are going to use the money for and what return they should expect.
To find private investors – whether individuals or private equity firms – you’ll need to work every contact you have. Take every invitation to coffee that you can get. Call everyone you know that knows people with money, and offer them a finder’s fee if they can get you in touch with potential investors.
Venture Capital – Film Financing Companies
If you are prepared to treat your production company like a business, it’s worth approaching film financing companies or other venture capital firms. These companies may offer capital on terms such as “gap financing” or “negative pickup funding,” as we discussed above.
These companies are only going to be interested in your project if you can give them reasonable assurance that they’ll see a financial return on their investment.
Tip: Many film financing companies only support certain kinds of projects (e.g. documentaries) or prefer to jump into projects at specific stages (e.g. at distribution). Don’t neglect to research companies before you pitch to them, so you can spend your energy on companies that are a good fit for your film project.
Angel investors provide seed money to startups or films that may not get initial funding elsewhere. Angel investors are often more likely to support riskier ventures than traditional lenders – but not always.
Angel investors tend to be more personally involved in a film project than equity companies and may be hands-on in helping you use their initial investment to secure more funding. Sites like Invstor, Music Gateway, and Pitchbook compile databases of angel investors with interest in film.
Co-production is when you join forces with another individual or production company to make your vision a reality. Some co-producers only provide financial assistance, while others may give you access to their equipment, network of contacts, or other resources. Some may come on as full-blown partners to get the movie made.
Crowdfunding happens when a community of fans raises money for a project they all believe in. The best-known crowdfunding platforms are IndieGoGo and Kickstarter, but the film-specific crowdfunding community Seed & Spark works better for some types of films – especially artistic documentaries and character-rich, story-driven pictures.
Crowdsourcing is a little different concert, but it can save you money. You don’t need as big a budget if you find actors, artists, composers, or crew that are dedicated to your film project and want to help, even if they won’t get paid (much).
Product Placement and Sponsorships
Product placement is a bigger source of income for major studios than you might expect. According to Concave Brand Tracking, 49 of the 50 most-watched films in 2021 snuck in at least one brand placement. Let’s just say – Jason Bourne doesn’t commandeer a Dodge Charger just because it was the first vehicle he saw on the street.
While you might not get BMW to loan you an X5 for your indie production, you can find niche clothing brands, food and beverage companies, or software providers interested in a product placement deal. We have also had videography equipment suppliers sponsor lights or lenses for our film projects.
By definition, a nonprofit organization can’t be a traditional investor in a film. But if your film directly supports the nonprofit’s mission, they may be able to help you in a number of ways. It’s possible that they can take donations on your behalf, which would give you an advantage at tax time.
They can also publicize your effort to their mailing list or membership, which can be a huge boost, especially if you’re crowdfunding.
Pre-Sales From a Distribution Company.
Funding a film is all about relationships. If you can go to festivals, make lots of phone calls, or rub shoulders with the right people, you may be able to sign a distribution deal to get funding for your film.
The distributor may write you an advance check that you can put towards production, or you may be able to take the distribution agreement to other investors to sell them on the project.
As film producer James Cullen Bressak says, “There’s no clean-cut way to do either of those things [financing or distribution]. Sometimes certain things work, and sometimes they don’t.”
Knock on all the doors until you find the one that opens.
Private grants for aspiring filmmakers are available from quite a few sources, including universities, corporations, industry guilds, non-profit foundations, and film festivals.
The great thing about grants is that you get to keep the money you’re awarded, often with few strings attached, as long as you report progress on the picture. The tricky part is figuring out which grants have application deadlines and criteria that fit your project well.
Since filmmaking is a boon to any local economy, many countries, states, or even municipalities have agencies that encourage film production.
The National Film Board of Canada and the British Film Institute (BFI) in the UK offer various grants to filmmakers. The competition for these grants is stiff, and governments often require more reports about the project than private sources of grant money.
These grants usually require very detailed applications. Bear in mind that the gatekeepers tend to be more concerned with artistic merit or activism than with any earning potential or wide appeal your project may have.
Tax Incentives and Credits
In addition to grants, many governments offer tax credit programs. Canada is well-known for its Canadian Film or Video Production Tax Credits (CPTC), which offer up to 25% tax credit on labor costs for productions made in Canada.
The US does not offer as many benefits, but multiple states do offer enhanced deductions for employee expenses incurred during film production within the state.
Self-Funding: Savings or Retirement Funds
If all else fails, you can foot the bill yourself. You may need to decrease the budget and scale of your project if you fund it yourself, but many fun films are made on the producer’s own time and dime. Sometimes a low-budget self-funded film can be proof of concept for a bigger production.
We know of a handful of filmmakers that have pulled money from their SEP-IRA or other retirement funds to make a film and at least managed to pay themselves back with the proceeds.
Bank Loans or Credit Cards
While using personal loans or credit to fund a film can be tempting, we encourage you to be extremely cautious about this approach. If you cannot interest experienced film investors in your project, the likelihood of its ultimate financial success is, at best, in question.
It is better to keep making phone calls to investors and applying for grants than to take on high-interest personal debt for an independent film.
Final Thoughts on Funding Film Production
In summary, funding a film is never done the same way twice. Filmmaking is truly a collaborative effort, and a well-executed independent film production takes a dedicated team of multi-talented individuals to pull off.
The more people you can get involved in your project, the more connections you will make, and the more doors will open to you as you pursue your path to filmmaking!