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Financing / Crowdfunding : I know my strengths, but were to flex? by Mac Hawbaker

Mac Hawbaker

I know my strengths, but were to flex?

Finding the money is not the easiest task. I've seen posts about using crowdfunding websites, but as I come from a heavy sales background, my strength lies in face to face meetings and one on one sales pitches. My question is, how/where do you find the people to set up these meetings with. Aside from cold calling a few dentists, and some Skype sessions with some physician friends of mine, I have not had much luck finding potential investors and I think that has to do with I may not be looking in the right place. Would anyone be willing to toss some knowledge my way?

Erik A. Jacobson

Film festivals are a gold mine. Take your elevator pitch and a pocketful of business cards. I know a filmmaker who joined a yacht club just to meet wealthy guys. Did he have a boat? Nope, just an interest and offered to help clean their yachts for free. These old dudes loved showing off their boats while teaching him the basics and started investing in his indie films. Big time. Rinse and repeat, depending on your interests. At real estate meetups, how-to stock market meetups, and similar investment gatherings.

Willem Lodewijk Elzenga

Its all about networking continiously. Therefore looking into excisting networks like country clubs, business clubs, yachting clubs or other networks like the church can be of great help. We're I live film is not very popular, so it can be a real drag. Finding money is the hardest part.

Dan MaxXx

I don't know how much you're asking strangers but anything over $10,000 and I would suggest to form a LLC company, have a lawyer draft real binding contracts and then go after money people with a business plan in place.

I've been part of several movie LLC's and I don't touch money from individual Investors. Ever. Let my partners handle the money/checks. I just go to the bank and withdraw.

Don't deal with headaches like dudes showing up to your house with baseball bats/guns demanding their money back.

Mac Hawbaker

Lol. Yes, I have the LLC and business plan in place and everything is being done legit. Hopefully I'll be avoiding any Thursday night drives out to the cornfield with Joe Pesci and a few aluminum bats, ha. Cruising the elite Club and Meet-up scenes is a great idea, I never though about that.

Shadow Dragu-Mihai

Your LLC is, frankly, pointless until you actually have investor(s) ready to go... and many of them will have their own ideas of structure. As an entertainment attorney, I never, ever, ever incorporate before I have someone lined up.

Dan MaxXx

Shadow Dragu-Mihai how do you handle money without a company in place?

Julien Klenn

Shadow Dragu-Mihai That’s absolutely crazy. You cannot touch any money without an LLC is in place and no legitimate investor will give you a penny if you haven’t formed an LLC of your movie.

It’s actually criminal and SEC can put you in jail for soliciting without an LLC in place. You’re selling shares to your investors and you cannot sell something you don’t have.

Please don’t give people wrong information if you don’t have the knowledge. You can get them in big trouble.

Willem Lodewijk Elzenga

I get Shadow's thought. There's no point in spending money to legal work if you haven't got your partners and investors in place. There is a grey area offcourse, but film is a creative business, not a regular one.

Mac Hawbaker

I agree with the idea of having money opportunities lined up ahead of time, but having the LLC in place was what allowed me to get in the door with the few financiers I have managed to get. Without the LLC in place, I think it's too easy to be labeled as some bum asking for money. Great point too Julien, legally, the potential for shit to hit the fan increases exponentially when the money starts to exchange hands and having the LLC in place is critical. Believe it or not, I have gotten similar advice to Shadow's, from lots of filmmakers in my market. :-(

Shadow Dragu-Mihai

Dan MaxXx and Julien Klenn you missed the point entirely... it takes about 12 minutes to incorporate... You do that when you actually have a legit investor AND after you have discussed what position they want. You don't take the money before the incorporation. Cart before the horse otherwise, though attorneys get to charge incorporation fees... and then more fees to alter your corporate structure when your vanilla LLC isn't organized the way your investor wants... An empty LLC looking for money is still someone looking for money. One measure of the experience (or lack thereof) of your investors is if they are impressed by an empty LLC...

Julien Klenn

Shadow Dragu-Mihai First money in or not, no legitimate investor will talk to you if a PPM (Private Placement Memorandum) is not in front of them.

Most will be under Regulation D Rule 504 (movie budgets that are 1 million and under) and you cannot raise a penny or even solicit without a PPM is in place.

As for the LLC structure, 99% will have the same. You’ll be under either 504,505 or 506. There’s no some “special” way an investor may want it be structured. It all depends how much you want to raise and will always fall under one of the three, unless you’re setting up a Film Fund and want your investors to invest in a slate of movies which is a different discussion topic.

Also no legitimate investor in this industry will bring out their checkbook unless you have your bank account under the name of your movie LLC.

Nobody writes a check to a person, unless they are family members and/or the required amount is couple hundred dollars for an experimental teaser, short etc.

Let’s say you pitched to a potential investor and they liked the idea so much that they wanted to invest right away. To whom will they write the check to? Will you tell them “Wait. It takes 12 minutes to incorporate. Just give me a laptop.”????

The things you’re saying are so out of reality, unprofessional and amateurish that I’m having a really hard time believing that you’re an entertainment attorney.

No real attorney would tell you that it’s okay to break the law(soliciting for money without having no shares to sell) until the financial aspect is in place.

Apparently, you have never raised a single penny yet, but at least stop talking nonsense about things you don’t know and don’t misguide people with wrong information that could get them in legal trouble.

Shannon Tharp

This is an issue that looms the best of us. I would have to say you must first get in the arena of the investors. This means you must work to get into their world first before ambushing them with this great investment opportunity. Get the business in order legally and make sure your business plan, designs, script and story are air tight. It has to be an easy yes and not a slow no for investors.

Jesse Randell

Some great bits of info in this conversation, but I'm curious. I have a business plan, script, story, budget and board and a legit LLC, how do I find this arena of the investors?

Mac Hawbaker

Revisiting the thread thanks to Jesse here. Your question was, and is, my original focus of this post. Since the the posting about three months ago, I have conversed with a few established producers and directors and have gotten some first hand feedback as to where they are looking. Both took similar routes in that they now work with a some sort of firm (hedge fund, investor group, etc.) and get funded that way. Getting there was the trick. Aside from some "lucky" circumstances that led to them meeting people connected with money, it was all knocking on doors and seeking out individual investors with money to spare. Once they had a few films under their belt, they only seek out private investors to gain an initial percentage of capital, then take that capital and show the firm they are working with they have 25-50% raised, the firm then invests 100% of the funds into the film, they pay their private investors back their initial investment (+20-30% if it a debt investor agreement), then they only work with the investment firm in dealing with the income and profits of the film. This is not a end all be all way of doing things, but this is what I have learned from others. I myself am the same shoes as you Jesse, and have been grinding and networking to scrap up cash. Money raising, while SLOW, is at least ticking on the up, dollar by dollar. It's a war of attrition. Stay strong and stay focused.

Jesse Randell

Great information, thanks for the update.

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