13 Film Financing Secrets Every Indie Filmmaker Needs to Know
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. I’ll also add my experiences as a true independent filmmaker, and tell you all about how I found funding for my latest feature film, Spin The Wheel!
13 Sources of Film Financing
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.
1. Private Investors
Individual investors may be companies or high-net-worth individuals looking to diversify their investment portfolio or support causes they believe in. Their support can lend credibility or visibility to your project if they are well-known.
Your investors will expect a “private placement memorandum” that explains what you will 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 who knows people with money, and offer them a finder’s fee if they can get you in touch with potential investors.
Neil’s Take: When my production company was looking for funding for our movie, Spin The Wheel, we were able to leverage this source of funding. Through personal connections, we found private investors who were interested in the unique story we wanted to tell.
What helped furthermore, was that they were impressed by our complete honesty when discussing return-on-investment, and the fact that there are no guarantees when it comes to independent film. We didn’t overpromise anything, and were forthright about the potential for both risk and reward.
2. Venture Capital
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.
NEIL’S TAKE: 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).
Make sure you research companies before you pitch to them so you can spend your energy on companies that are a good fit for your film project.
3. Angel Investors
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.
NEIL’S TAKE: Sites like Invstor, Music Gateway, and Pitchbook compile databases of angel investors with an interest in film.
4. Co-Production
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.
NEIL’S TAKE: Communication is key for co-productions. You need to ensure that both parties are on the same page for separating responsibilities, roles and even finances. Written contracts are key for everything from who pays for what to who has creative control over what.
5. Crowdfunding
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).
NEIL’S TAKE: Read the fine print when it comes to crowdfunding sources, as for some, you need to raise the full amount in order to gain access to the money. On other platforms, you can access whatever funds have been raised by the time the campaign ends.
Also, make sure that your project doesn’t go against any of their guidelines or rules – or you may not get that money at all!
6. 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.
NEIL’S TAKE: With indie films, product placement is on a smaller scale, but it is still possible. Rather than getting funds, many indie filmmakers can leverage their project against film equipment and props.
For example, a videography equipment supplier may sponsor lights or lenses for your film. Or, a car dealership might provide a vehicle for you to use in your film, free of charge. Giving credit to sponsors in your end credits is a must.
7. Nonprofit Partnerships
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 many 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.
8. Pre-Sales From a Distributor
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.
NEIL’S TAKE: When it comes to indie film, presales are becoming rarer – but they are still possible. It all depends on what the distributor is looking for, and if your project meets your specific requirements.
The key is to develop relationships and talk to as many distributors as you can, to find out what everyone is looking for!
9. Private Grants
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.
NEIL’S TAKE: Many private and non-governmental organizations offer some kinds of funding, either as grants or awards. Apply to as many as you can, but read the fine print to see if your film (or you as the filmmaker) meet their criteria.
Also, be very aware of which grants come with strings attached, where you might need to sign over some of the ownership of the film, or open yourself to audits or examinations of your processes, etc.
10. Government Grants
Filmmaking is great for local economies. That’s why many places, like countries, states, or cities, have groups that support film production.
In Canada, there’s the National Film Board, and in the UK, there’s the British Film Institute (BFI). They give out different grants to help filmmakers. But, getting these grants can be tough. Governments usually ask for more details about your film project than private grant sources might.
When you apply for these grants, you need to fill out a lot of paperwork. Keep in mind that the people who decide on these grants usually care more about the artistic value or the social messages of your film, rather than how much money it might make or how popular it could be.
NEIL’S TAKE: Seek out filmmakers and producers at your local level, who have experience and success with getting government grants.
For first-time filmmakers, this is not an easy path to navigate as there are tons of hoops to jump through and forms to fill out. By the bureaucracy involved and the number of people who apply, most of the bodies are looking for reasons to disqualify you, rather than reasons to approve you.
If you fill out everything properly, your chances of success are much improved. If you are successful, you will also need to write lengthy reports after the movie has been made, on many facets of your production. This is because the boards want to see exactly how the money was spent.
11. 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.
NEIL’S TAKE: This varies from location to location – again, seek out someone who has done this before and make sure to read the fine print. You don’t want to leverage tax incentives against your budget without knowing for sure that you will be recouping that money.
And remember, when it comes to tax credits, this is money that comes after the film is finished. So, most filmmakers that are approved for tax credits will get a short-term bank loan – they use the money from the loan to fund a portion of the production, and then use the tax credit to pay back the loan once it arrives.
12. Self-Funding
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.
NEIL’S TAKE: I know of a handful of filmmakers who 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.
13. 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.
NEIL’S TAKE: Some banks have special departments dedicated specifically to the arts (including film). They are structured to work with independent artists, and often offer favorable conditions and low interest rates.
14. Working For Free
In the independent film world, self-funding through personal labor is a common practice. Filmmakers frequently take on multiple roles in their own projects – from writing and directing to acting and cinematography – without monetary compensation. This investment of personal time is actually a form of financial contribution, considering the adage “time is money.”
For instance, consider the task of film editing. Hiring an editor for an independent film might cost between $20 to $100 per hour. In a typical film budget, this could add up to a substantial expense, likely $5000 or more.
However, when a filmmaker edits their own film, they’re effectively saving the production this cost. While they don’t physically pay out $5000, the value of their editing work is equivalent to this amount.
This contribution, in terms of skilled labor, is an essential aspect of film funding. It is often overlooked but very impactful in reducing overall production costs.
NEIL’S TAKE: This is how we were able to produce such as professional-looking film on a shoestring ($25,000) budget. Many of the people who worked on this film were unpaid, including myself.
While I do not advocate doing this forever, it is an effective way to make a much higher-quality film than you’d be able to make otherwise. And, having a top-quality film is a great way to make a name for yourself in the film community!
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
- Editing and color grading
- Visual effects software programs and people to use them
- 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.
Studio Financing
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?
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.
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 who 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.
Financing for Indie Filmmakers
Set Realistic Expectations
I’m 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 making your dream project 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 who 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.”
Spike Lee
Develop a Pitch Package
Your pitch has to be extra convincing since the competition for investors’ attention has escalated so quickly in recent years. 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 must include a written synopsis and business plan – but make sure to include great visuals to prove you’re capable of producing a visually compelling project.
Write the 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 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 to convince investors that it will be a profitable project to support.
What You Can Offer
When preparing your investment proposal, make sure to clearly outline the benefits for potential investors. Consider the most suitable financing model for your production company. Are you planning to share profits with investors, or provide a return based on interest?
Remember, incentives for investors aren’t limited to financial gains! They can also include recognition and exclusive experiences.
For instance, would you offer your investors credits such as “producer” titles? Opportunities to meet the cast, experience behind-the-scenes action, or attend glamorous red-carpet events could be enticing. Additionally, consider highlighting the broader impact of your film – does it contribute positively to societal issues or shine a light on important causes?
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 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!
Final Thoughts
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!
