Crowdfunding for movies is becoming better known as some projects start to do well. As crowdfunding, in general, grows in popularity and interest, it is not surprising that the thought of mixing these pursuits with funding a film is entering the realm of possibility, and it can be quite lucrative. While most of our work is with independent filmmakers, this post covers crowdfunding for movies from the investor side. We hope more people will see the incredible talent and potential of the indie producers we work with and decide to support them. It’s a truly exciting area!
Crowdfunding for Movies: Types
There are many pluses of investing in crowdfunding for movies beyond the hoped-for return. The insider information you can get can be a lot of fun, and you become a promotional arm when it is in the can. In addition to the typical crowdfunding where payback is based on the movie’s success and profits, you may have other choices, such as:
Crowdfunding for Movies: Debt Funding
Debt funding is where you invest money in a movie as debt, where payback is fixed. The return may be nice, but there is no equity stake, so you do not benefit more or less depending on the project’s success.
One of the first ways peer-to-peer lending, or debt crowdfunding, was used was in the arts. The most common ask was for movie production. A movie is one of the hardest projects to get “traditionally” funded, given that few major studios fund projects, and the ones there do – even some of the larger independent ones – can be very picky.
Getting a studio to pick up a project is very difficult for a new director and producer. In the past, this meant practically going door to door to visit people with capacity who might have some connection to the plot, characters, or topic covered by the movie. And, of course, those few people who had previously agreed to help finance a project would be completely overwhelmed.
But with the increasing popularity of P2P Lending Investing and peer-to-peer loans, a new way to get a movie funded has appeared. A producer can post the plot, actors, and other details at a P2P Lending Investing site and potentially get funding that way. And as we’ve mentioned, this can be quite interesting for the investor, who might get insider perks and information about the movie. Suddenly, the studios were not the only place where movies could get funded.
Crowdfunding for Movies: Equity Funding
This area involves buying an equity stake in the business behind the film – the production company may want longer-term investors who will stay with them through multiple projects, so crowdfunding for movies can sometimes entail funding a business rather than one film. This can be exciting as they watch the value or success of each project. The benefits of equity crowdfunding for movies for the investor is that payback can be high if the project is a success, and the benefits for the producer are that they may be able to get significantly more funding this way, and there is no payback if not.
There is increasing competition for equity crowdfunding for movies, with more and more websites offering a chance for indie producers to showcase their projects. This is excellent news for investors, who will have more choices and an opportunity to see which films have become successful through equity crowdfunding and what current offerings are similar.
Crowdfunding for Movies: Rewards Type
You can make a donation that does not get a monetary return but can get you insider perks, such as exciting and informative information as the project moves forward, souvenirs, chances to be on set, and even the possibility of being an extra. You can feel good about helping a project and enjoy getting insider benefits. Perhaps the film is a documentary about something you enjoy, or maybe it is just a genre you like, or you want to see the process of producing a film.
Rewards crowdfunding for movies can even include walk-on or “extra” roles, and it is an excellent opportunity for someone who wants to learn what making an indie film is like, from start to finish.
Investing in a person or indie studio
You can sometimes invest in a particular director, producer, or actor who you think is interesting and has a promising career. You can be a part of that person’s success, getting updates on how they are doing. All three of the above options may be available in this case, whether you get equity in their future projects, provide debt funding they eventually need to pay back, or just perhaps perks such as tickets, recordings, or other types of VIP fan treatment.
There may be ways to combine some of the above. For example, sometimes a robust rewards program will be attractive enough that you are okay with taking a little less equity. Some projects offer a debt and equity combination where you get paid back a little but also get equity in the project.
Crowdfunding for Movies: What to Look for
Movies that cannot get major studio support or, in some cases, even choose the crowdfunding route can often find success, especially if they have a compelling actor, director, or producer signed on or produce a short version or preview that attracts a following.
It is sometimes helpful to look for a project with someone who knows their way around the business side of movie production so the producers and directors can focus on their craft. Often, you can research the people you might fund by seeing if they appeared on any online venues such as podcasts and YouTube series. You can also ask if they’ve produced any short films you could watch. It’s so important, even after you like an idea or plot line, to know how the quality of the finished product will likely be.
After those basics, you need to move into the financial aspect – what is the plan for spending and the total cost, and what will happen to generate a return? How have similar projects been done with similar budgets? What is the timeline and the opportunities and challenges along the way?
Conclusion
As we begin to see more and more breakthrough movies get their funding this way, this area of investing may truly accelerate things. Of course, our job here is to choose what we think are the best projects, and we will soon start writing them up with an eye toward why they make a good investment. Supporting a movie is undoubtedly an out-of-the-box way to diversify your portfolio and is also quite risky.
While we do not directly provide investor services in crowdfunding for movies, we are happy to share information about the projects Charitable Foundation and are excited about. We can also share information about the different types of crowdfunding available and the platforms we like best in each area. We also have a Charitable Foundation where we support up-and-coming filmmakers and encourage you to help them, too!
Feel free to contact us if you want to know the latest movies we are supporting or want to generally discuss crowdfunding for movies as a potential investor.
