If you're looking to invest in movies, and not quite sure how to get started, our film investor primer is here to teach a lot of what you need to know, how to access filmmakers and productions and how to gauge a film's potential success. Our guide will cover how to invest in movies, how to become an accredited investor, an overview of how the film industry generates revenue and showcases some of our best filmmakers' projects looking for investments.
The very first thing you need to know about investing in movies is that it is very risky and comes with a strong possibility you will lose your money. ROI is usually not the driving incentive behind a film investment. Reasons to invest in films may include a passion for the message of the project, tax deductions and the perks of walking a red carpet, getting a producer credit or attending a film festival. Do not invest in any film if you cannot afford to lose your entire investment.
Can You Invest in Movies?
In the US, filmmakers are bound by strict laws, particularly from the SEC, when accepting investors in to their projects. There are two key types of investors, passive and active. An active investor generally has entertainment experience and connections, understands the details of the industry and will take an active day-to-day role in the production of a film. There are fewer restrictions around securing active investors.
Passive investors, on the other hand, must be Accredited Investors (High Net Worth Individual - HNI). In summary, an accredited investor makes $200,000 per year or has a net worth of $1 million. If a filmmaker is publicly offering investments in their film, they must use a PPM and they must ensure all their investors are legally able to invest. Filmmakers also have the ability to secure investments from up to 35 non-accredited investors per Rule 506(b), however, the requirements to do so are far more complicated than creating a PPM.
If you are working with a filmmaker who is following the rules, they will have a PPM of their film investment prepared for you, and in that packet should be the documents you need to prove you are an Accredited Investor. Be wary of any filmmaker not following the SEC rules who is publicly advertising their film to investors and looking to raise film financing of $100K-$5M. Read More: What is an Accredited Investor.
What type of things should you look for in a film investment to ensure your money is being used in the best way possible during production? A prepared filmmaker should be able to offer you a budget, script, the investment and offer, the ROI of comparable films, an experienced management team, the correct legal documents and a distribution plan.
Many filmmakers think pitching a script to investors outside the entertainment industry is an investment. It is up to you to decide if you feel you have the skill set to judge a script. Even after 20+ years in film financing, we at FilmProposals do not have the skill set to determine the financial viability of a script. Rather, we look for script coverage, which is a professional service many experienced producers use to determine the strengths and weaknesses of both the creative and financial aspects of a script before they decide to move forward on it. We trust expert opinions over our own when it comes to understanding the creative aspects of a story.
Other things we look for in an investment package include attached talent, the producer's understanding of film financing, tax incentives, back end talent agreements an overall effort towards fiduciary responsibility of their film and most importantly, their distribution plan. Whether the plan is theatrical, streaming or a combination, there is no chance of a return on investment without the film being seen.
The Wall Street Journal clearly states in their article, Will Investing in a Film Noir Put You in the Black?, "As with any business investment, you want to see a well-conceived marketing and distribution plan that makes sense and isn't built on hope."
As a service to both our filmmakers and investors, we highlight some of our Movie Investment opportunities open to qualified investors and looking for funding right now. Each of our highlighted film projects has been screened for legal requirements, producer experience, viable target market and other important criteria. Please support our filmmakers and please feel free to reach out to FilmProposals with any questions about the investment opportunities we recommend.
Capture the Flag Movie Investment Opportunity
Capture The Flag offers everything an investor should desire in evaluating movie investment. It is humorous, heartwarming…an Army veteran and a Navy veteran recruit their elderly neighbours in a feisty game of capture the flag to determine who wins the privilege to raise Old Glory each morning in their shared retirement community.
Confirmed actor attachments Dick Van Dyke, Louis Gossett Jr and Barry Corbin
Experienced Movie Producers - Donovan and Adam Montierth, of Brothers' Ink, have already produced Raising Buchanan with Rene Auberjonois, M. Emmitt Walsh and Amanda Melby (2020), Locker 13 with Ricky Schroder, Rick Hoffman and Jon Gries (2014) and Three Days to Vegas with Peter Falk, George Segal and Rip Torn (2007)
Strong following and social media proof (over 47k reactions and 5k comments) at Capture the Flag. Military theme lends itself to a Memorial Day, Fourth of July or Veteran's Day release, along with a niche audience of 22 million US Veterans + 100 million immediate family members.
For Film Investors (How, Why and Tips to Invest in Movie Production)
While investing your hard-earned money in a film production is not for the faint of heart, the returns can be sweet, not to mention the adulation that comes along with being a "producer" of a successful film and getting to walk that red carpet. Following the model of Silicon Valley technology investment, an increasing number of investors are investing in film production to get their piece of the pie. The good news is that film investors do not have to be millionaires to be able to make the necessary investment.
Investing in independent film is not only a good way to help improve the arts and shift spare cash into something worthwhile, but you'll also get a buzz out of being a part of something really exciting. Independent movies occasionally rise to the top and oust the major movie studio productions, so how great would it be if the project you invested in manages to be one of those unpolished gems?!
Just want to thank you for your materials and help over the past year. I could not have raised the $1.5 million or made this film without the materials you provided. The bargain of my career!
- James Sadwith, Producer, Writer, Director, Coming Through the Rye
Finished my deck on Friday. Got it into a few potential investor’s hands over the weekend, and by Monday had 3 out of the 10 available memberships spoken for at $160K each. The revenue projections and film comparable services by NASH, along with the business plan and pitch deck templates were instrumental in presenting the project in such a way that financially minded potential investors could understand the movie business, the market and how my project could possibly give them a substantial ROI.
Melissa was amazing throughout the entire process. Always there to answer any questions. Couldn’t have done it without you guys. Can’t thank you enough. Best money I’ve ever spent.
- Michael F, Executive Producer, Inside Sportfishing (March 2021, Gold + Financials Bundle)