What to ask before investing in a feature film?

June 1, 2009 7:36 PM

A question about investing in an independent film. The filmmaker has done one award-winning documentary. He is now working on a feature film project. He is looking for investors..He has got a letter from a major film studio (signed by a senior vice-president) saying that they are very "interested" and want to be kept informed of the film's progress. This sounds good to me. But how good is it really? How many letters of "interest" do major studios send out?

I have plenty of experience investing in public markets, but zero in film. Which is to say i don't even know what questions to ask! So has anyone out there invested in films and what would be some good questions to start with.

posted by storybored to Media & Arts (24 answers total)

Response by poster: I should also mention this film is being made in Canada, where there are generous tax credits that supposedly will return thirty-percent of your investment (though i guess getting the other 70% back is the tricky part).
posted by storybored at 7:37 PM on June 1, 2009

Best answer: He has got a letter from a major film studio (signed by a senior vice-president) saying that they are very "interested" and want to be kept informed of the film's progress.

Showing non-committal personal correspondence to potential investors seems really, really unprofessional to me. This is just a courtesy letter, not a commitment to anything, and it means pretty much nothing when it comes to the risk/reward prospects of your investment.

The most important things to see are the business plan, particularly the distribution plan, and the credentials and track records of anyone else who's attached to the project.
posted by Sidhedevil at 7:46 PM on June 1, 2009

I have never invested in an independent film myself. I have a very good friend who has. When I asked him how his investment was going, his reply was, "I invested because I like the director and I think he has potential to make good movies. I did not invest based on sound investment criteria. I doubt I will get my money back, but I will get invited to the premiere and get a few other perks to make me feel like I was needed."

I think in the end he did get his money back, but the odds of that happening are not great. Good luck.
posted by JohnnyGunn at 7:47 PM on June 1, 2009 [2 favorites]

Film and theater investments are made for friendship or vanity. If you know the director and want to support their work, go for it. If you want to bask in the glamour of the film industry, go for it. If you want to make money, stick with publicly traded instruments.

I say this from personal experience. Don't fool yourself.

Also -- you don't mention whether you've read the script. I take that to mean that you haven't or that it wasn't striking enough for you to mention. Not good signs.
posted by alms at 7:58 PM on June 1, 2009 [1 favorite]

There are two ways to think about this:

1) Financial. An investment of this type is very illiquid and so hard to value. Do you have experience valuing illiquid investments of this kind? Though something like real estate is illiquid, it is not analogous, so keep that in mind if your first response is "I've developed real estate; therefore I can handle movies!" which is what an acquaintance of mine thought about investing in a Broadway play.

2) Unpredictability. Ever see the show Entourage? From what I've been told by people who work in Hollywood, the unpredictability that the show uses as a way to drive its stories forward is actually rather accurate. You say you're contemplating an investment in an independent film, but those have all the unpredictability, if not more, of a typical studio film.

Bottom line: if you have a chunk of change that you can afford to lose, by all means, go for it. Perhaps it's the next My Big Fat Greek Wedding. Odds are, however, that it is not.
posted by dfriedman at 8:05 PM on June 1, 2009

I worked on two films, doing crew work, that had any sort of success.

I read the script to one, and said "They can sell this," and they could.

Regarding the other, I remember saying to myself, "How on earth did they talk Kris Kristofferson into this?"

So, for me, your two questions are: Can I see a script? and Who else is involved?

Wrong answers:
We're going to ad lib the dialogue
My girlfriend is an actress.
My best friend will DP

I worked on a lot of independent films that failed. It would take a giant leap of faith for me to put my money down.
posted by rakish_yet_centered at 8:16 PM on June 1, 2009 [1 favorite]

Be sure to have the contract evaluated by a very experienced entertainment attorney. Even if the film is a huge success and makes tons of money, due to the way studios and distributors structure their business, many many films never show an actual profit.
posted by sammyo at 8:19 PM on June 1, 2009

Response by poster: Also -- you don't mention whether you've read the script. I take that to mean that you haven't or that it wasn't striking enough for you to mention. Not good signs.

There's no script yet. That's one reason why he needs $. They do have a 40-page treatment. I've read it and it isn't bad but it doesn't blow me away.
posted by storybored at 8:20 PM on June 1, 2009

There's no script yet.

Then that letter of interest almost certainly means nothing; the chances that it's anything other than a routine courtesy are minuscule.

Also, a 40-page treatment is another sign of less than extreme professionalism when it comes to feature film production.
posted by Sidhedevil at 8:29 PM on June 1, 2009

I'm going to have to agree that investing in independent film is more a gesture of patronage than a sound financial investment. You will certainly see the occasional "break out" film, but on a whole your investment will likely see little if any return. The ratio of films made to those that actually profit just doesn't come out in your favor. Any company that picks up a film on the distribution end (which is what your friend's "letter of interest" sounds like) will need to spend a great deal of time and money in the promotion of that film. There are a LOT of variables to be ironed out when a film is being purchased. Often times small films will require "finishing" before the movie can be up to par for the big screens. Sometimes these costs are legal (e.g. music licensing) and sometimes they are technical (e.g. video to 35mm prints). In the end, they are all costs that need to be recouped before the film can reach profitability.
posted by OccamsRazor at 8:31 PM on June 1, 2009

If you go for this because you support the cause but secretly hoping to make a profit, then you really do need an entertainment lawyer. You know the guy who played Darth Vader? He didn't make a lot of money because Return of the Jedi never turned a profit. Crazy!
posted by furtive at 8:41 PM on June 1, 2009

There's no script yet. That's one reason why he needs $. They do have a 40-page treatment. I've read it and it isn't bad but it doesn't blow me away.
posted by storybored

Is there anyway that you could say that you'd be interested in being one of the investors after they have a script written, if you are still interested?

I'm sure they'll need more money later and that could be your opportunity to jump on board.
posted by zephyr_words at 8:46 PM on June 1, 2009

Letter of interest means nothing. If they were really interested, they would make it themselves.

Everybody saying that it's a vanity thing is right. It's a nice thing to do, helping someone make a movie. Making money on a movie that isn't already on track for distribution is a very slim shot. It happens, but you should accept the notion that it's going to be a loss on your balance sheet come tax time.

Also, nobody needs money to write a script for a self-financed movie. If the writer/director isn't willing to do it himself on spec, without being paid, then you don't want to get involved. Do not invest in a movie that doesn't have a script yet. Tell them to come back when they've got a script. (My advice would be different if you were a professional producer, but as a private investor, that is totally insane.)
posted by paperzach at 8:55 PM on June 1, 2009 [1 favorite]

Any company that picks up a film on the distribution end (which is what your friend's "letter of interest" sounds like)

"Keep us posted" does not mean "we want to distribute your film."

Hell, "we want to distribute your film" doesn't mean "we're going to distribute your film." Again, if it were me, I would not pay a whit of attention to this letter, except insofar as the filmmaker's presenting it as A Big Deal strikes me as unprofessional.

Also, nobody needs money to write a script for a self-financed movie. If the writer/director isn't willing to do it himself on spec, without being paid, then you don't want to get involved.

This times a million. And seriously, a 40-page treatment is strictly Amateur Hour.
posted by Sidhedevil at 9:36 PM on June 1, 2009

And seriously, a 40-page treatment is strictly Amateur Hour.

Seconding this. I've read hundreds of screenplays and I don't think I've ever even seen a 40-page treatment.
posted by dhammond at 10:02 PM on June 1, 2009

There's no script yet. That's one reason why he needs $. They do have a 40-page treatment. I've read it and it isn't bad but it doesn't blow me away.

Ah. He's looking for an investor to hire a screenwriter?

Nope. If you like the guy and want to give away some money then go for it. But this is like me asking investors for money for my new 75 mile per gallon internal combustion engine. I don't actually have the plans yet, but here are some journal articles talking about how we can make engines more efficient in theory.
posted by Justinian at 10:15 PM on June 1, 2009

From my experience:

1)Letter means absolutely nothing.

2)No script? Game over. Stop talking, stop looking, move along.

3)And he isn't merely discussing a project in general terms, but actually dared to solicit for money without a completed script? Never deal with this person again when it comes to film. Yank him out of your rolodex.
posted by VikingSword at 10:26 PM on June 1, 2009

Is there an echo in here? It is not an investment. Ask Art Buchwald.
posted by snowjoe at 10:43 PM on June 1, 2009

storybored The filmmaker has done one award-winning documentary. He is now working on a feature film project.

Did that "award winning documentary" deliver a profit to its investors?

paperzach: Also, nobody needs money to write a script for a self-financed movie. If the writer/director isn't willing to do it himself on spec, without being paid, then you don't want to get involved.

Well, if it's another documentary, it might not need a script.

That said, paperzach has a point: Before you invest, you would want to see a budget for what your money will be spent on; and it's my understanding that most investors investing in things like startup companies expect the founders to be paid in equity, not cash from their investment. So in film terms, it would be very unusual to pay someone to write a script, unless they are an experienced script writer with a good track record.
posted by Mike1024 at 12:36 AM on June 2, 2009

Douglas Adams has a joke in The Meaning of Liff about this. The book is all made-up word definitions. One of them was something like, "To fritter away a perfectly good life pretending to produce films."

The lack of a script seems very American Movie to me and not in a good way.
posted by Kirklander at 12:59 AM on June 2, 2009

Response by poster: This times a million. And seriously, a 40-page treatment is strictly Amateur Hour.

Sidhedevil, dhammond, good point. I've done some reading now and I see that the treatment they've given me is the 'original draft treatment', when as an investor I should have gotten a 'presentation treatment' of 7-15 pages.

Paperzach wrote:
My advice would be different if you were a professional producer, but as a private investor, that is totally insane.)

What would your advice be if i was a producer? I'm curious to know just to get a feel of the difference in roles.
posted by storybored at 7:39 AM on June 2, 2009

What would your advice be if i was a producer? I'm curious to know just to get a feel of the difference in roles.

If you're a producer and you like the sound of a project, you get on board and help the guide the thing toward some kind of realization. This can mean anything from building the team (bringing in other talent) to securing financing (and all the complexities involved).

A committed producer is exactly what this project sounds like it needs.
posted by philip-random at 9:28 AM on June 2, 2009

Sounds like it has all been said. The letter means nothing and unless you are very comfortable in not seeing any return I would steer clear.

I have 24 years of experience working in Hollywood and I have never met single person that has made money investing in a feature film.

Good luck,

Henry
posted by silsurf at 5:42 AM on June 3, 2009

And seriously, a 40-page treatment is strictly Amateur Hour.

I just have to say that this simply isn't true. I've seen treatments that were 7-10 pages long and I've seen treatments that were 50-60 pages long. It's just a matter of how detailed the writer or director gets, what they're talking about, and how it's formatted. I submitted and was paid for a 43 page treatment just six weeks ago.
posted by incessant at 1:46 PM on July 10, 2009