Financing / Crowdfunding : How to spot a bad investor by Anneke Koremans (Jeanne D'Août)

When one is talking about investors in the legal sense of the word there are already many protections in place. The SEC protects both parties - you know that there are also many "filmmakers" who gather investors and then just walk away with it. So are you asking about investors who are not accredited?

Hi D, thanks for your reaction. :) Is there a list of un-accredited investors and/or fakes? I'm very new in this biz, so good to know about the SEC. Thanks! xox

No. There is no list of not accredited investors. Most people (you for example) are not accredited investors so that list would be enormous. While there may be a list somewhere of scam (fakes) investors and filmmakers I don't know that would be of much help. They change their name before the scam the next mark.

As with anything else, I would advise investigating their history and getting first-hand references from an external source.

Thanks for the feedback! Have a wonderful weekend! :) xox

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@Anneke fakes are every where , you can't avoid them but rather run to deal with them , some time those who fake you might be thinking your the one faking them . but any way it's two traffic , you just have to set terms and conditions that favors you most that's if you can negotiate for them . happy new year from Julian

Or... You can not set terms and conditions with fakes at all. They are everywhere, but I think you can avoid them.

Thanks guys! Well, we'll see where the path takes us, in the meantime I'm using my intuition and some deeper research into the investor's background to see where it takes us. Warm hugs and have a fab and safe 2014! xox :)

What would your deeper research consist of, besides the background of the investor??

Finding out as much as possible, I guess...

Why not use an Escrow...? Like in Real Estate. If in fact they are an investor, why are they walking with the money? One would think an investor would be the one being damaged. While a shady Line producer 'bilks' an account. For example. Use an escrow account with a very trusted source. With checks and balances and pay as you go. Like paying a contractor out front for work on your house. Good luck on getting the job done. I order a jacuzzi tub- I pay for tub. Tub is delivered- tub installed. Next...I order new kitchen, give deposit, cabinets delivered, I pay for cabinets, contractor installs and contractor is THEN paid. After install and satisfaction.

Good idea...! ;-) xox

Other than a solid agreement with terms and payments defined and scheduled, I'm not sure what you can do to protect yourself from someone not paying money that is promised. It will get messy in any case. Making sure that the debts are paid immediately (and don't mount up too quickly) as production moves forward can help. In general I would trust your gut on judging character. If someone seems shady, has strange motives, seems too good to be true, or is hard to reach they will be even worse when stakes are up.

Don't let any outsider control the money. We have our own company that handles the funds, we have an auditor who checks the books and countersigns checks reporting to the investors and stakeholders including writer and Director.. Nothing happens until the cash is deposited with the company. Promises are like dreams, wake up and they are gone. Save yourself some grief and do the preparation properly.

Thank you Carson and Allan! :) xox

If you want a simple "Howto" that we operate I can give you the nuts and bolts. We find our business model very quickly sorts the genuine investor from the wannabe and also totally precludes the dishonest producer from getting any loot at all! It's really cool when some sharpie rings you up to abuse the fek out of you because he cant access any funds without 2 other people approving! LOL

That is very cool! Thanks so much! May I e-mail you? My e-mail address is anneke@panoccitaniamedia.com xoxoxoxox

Your email address is not working. Is there a spelling error?

Otherwise anneke@barinca.fr. Strange that the other one is not working...

One common aspect with the first time investor, who might have very good intentions, is that he wants to be in the film business! What I mean by that is that, as a successful businessman (I will not say or woman because I have not had this experience with a woman) will often think that if he is providing the money, or any money, he should be in charge of every aspect of the project. It is a true saying that every businessman is confident that he knows everything about two businesses, his own and show-business. You must structure your deal very carefully so that the investor knows what he is getting into and he must have confidence you will use his money wisely otherwise he will protect what he has earned and pull out of the project. To the film maker money is a means to an end, for investors it is the end product of their labors and, unless they have confidence that you will care for it as much as they do, and be reasonably confident you will add to it, they will indeed pull it at the first difficulty.

Thanks so much for this advice Tim! So when someone comes around the corner asking all sorts of information about the project, eventually saying he would pay on a monthly basis starting on day 1 of the (pre-)production, instead of all at once before the production, it is more likely to be someone of genuine interest?

Possibly in that they are promising you support now not at some time in the future BUT if they are paying as they go they are the active Executive Producer and control what you do. If you can live with that it could be a good way to go but be aware the producer will consider you his employee and the movie his at the end of shooting. A while back I had an acquaintance who bugged me unceasingly about wanting to invest in movies. He would often use that old saying that it is easier to raise 100 million than 1 million, wanted to be involved at any level. So eventually I put him together with a producer friend of mine (very well know with some great credits) who I was working with on a great story, historical subject, and a major Oscar winning star attached, which needed $5m in equity to get off the ground. Because he saw himself in a position to control the destiny of the project he immediately switched from hopeful investor in his first movie to trying to tell the producer what was wrong with his plans. Needless to say the movie was not made.

Wow!! That IS good to know! Thanks so much, Tim! xox Sad to hear this movie ended up having never been made.

Like everyone else in the business the only way to minimize getting dupe is by getting a good entertainment attorney and listening to them. Most unsavory investors can't stand up to scrutiny and they should never control the project creatively. Their creativity should come the form of creative finance other wise they are an investor/producer which many wind up becoming.

I wish I had a better handle on investors as well. One guy, after my group had completed preproduction and had a terrific casting call, decided to delete all the screen tests after he reviewed them (only once) and made a list of who he wanted for the principal parts--all on his own. It turned out he was a heroine addict who had successfully completed his methadone treatments the year before and was feeling creative. He felt like he owned the entire production as well, and all the decisions were his alone. Most recently, a female investor who wanted a script revision waited until I had modified the script then: "OOPS! Changed my mind about making a movie." She never even looked at the revision--just lost interest, got excited about some other flash in the pan. There are more flakes, wannabes, and over-inflated egos in this business than any other industry, except maybe politics.

Yeah we've all run into wannabes and bs artist some even have money especially professionals like accountants or dentists who tend to have a lot of disposable income. the bottom line is if someone wants to invest. The first thing you should ask them is Why? If it's to make a profit then they should stay out of it creatively, period. Read the material, put up your money, and let the people you invested in do their job.

Absolutely! Thanks for sharing your experiences! Wow! It's all very interesting and it has made me very alert indeed. Many thanks! xox

I had a situation developed during 2008-2009. I guy answered an ad I had put on Craig's list and said he was producing a film about a young woman adjusting to the fact, that she was a vampire. Sounded interesting to me,and I wrote a long three part musical piece for the movie. I was hoping to edit parts of the music for the Movie with the director. Well, it turned out that I sent samples of the music, and the producer loved it. So, he asked that I would send the whole of the musical piece and I said no, not until I receive the whole amount of the project Monetarily. Then, I relented and asked for a portion of the fee as a rider. Still, he refused. I didn't hear from the guy for a Month and then he finally sent me an email, telling me that he had no funds to do the film after all. There went two months worth of work down the drain.

Wow... that really sucks... Maybe you can re-use the music for something else?

Hi, Anneke, I can help you find reputable investors But, tell me about yourself. If you want, you can email me privately at alfred_102272@yahoo.com. I would like to know where you live, what kind of resources are available to you, and if you have cable access production studios available in your area.

If you don't hear from me, just keep trying. I have an automated email manager, but still I have to deal with almost 30,000 emails a day. It's easier to get me on facebook.

Ever heard of Slated.com site you can post your project and search who knows it could be an avenue for getting your production green lit and financing.

I've been a member of Slated.com since they first started, and believe me when I say, "it's a complete waste of time." That is unless you already have name attachments (i.e. name actor/s, name director, name producer, a big agent with some real juice, a business plan, and/or a completion bond) and a distributor or sales agent in place, that they sanction. Otherwise they won't allow you to publicly post your project to potential investors on their site. So basically you have to defeat their catch 22. Here's the kicker... If you have all those things in place already, plus a great script, you don't need Slated. A bank will loan you the money because your attachments and script are bankable assets, which the bank will see as worthy of taking a chance on. And remember, you'll be asked to give up a lot of personal info, as well as access to your friends and family, and business contacts, on facebook, linkedin, and twitter, as well as your account passwords. So if that doesn't scare you off and you meet all their criteria to qualify, and you still want to go that route, then by all means, give it a try. You might have a shot. Although it's a really, really, looonnng, shot!

Thank you SO much for these comments! All very helpful! xox :)

Wait a minute a bad investor is one who doesn't give you money right? And a good one is one who does. :-)

No Mark, if he doesn't give you money he isn't an investor he (or she) is usually a time waster. A bad investor in my book is someone who comes up with very little money and then wants to interfere with the creative process.

A good contract will help you with any problems with investors. If they won't sign it then do not use them.

Thanks Janet! Yes, indeed. Would love to see how it works by looking over such a contract. I think it would be good to know as much as possible and not rely on others too much... xox

I think you have the ScreenWriters Guild of America? They have good sample contracts, and if you are a memebr they guide you through the process. We have the AWG here in Australia. Great value.

Hi Allan! That is exactly why I would like a professional screenwriter to write the script, as I am just the author of the original book. ;-) I have a lot of ambition though, and have reached out to many people for 2 years now. One producer is now looking into possibilities, so am waiting for her feedback. If this takes off, I believe she will have all the necessities in place, but just to be safe, I need to know as much as possible beforehand, before I sign anything. I would like to have a good end product, not something that will tumble into a deep gorge before it gets started just because I made some stupid mistake. I am very grateful to everyone who helps me see how things work, and how to recognize a bad investor, or if I really need an agent or just a good lawyer when things develop. I have tried so many entrances into the biz by now, that I am lost in the maze, hoping to find my way to the right path that leads to the center. Many thanks for all the feedbacks! Warm hugs! xox

I realize this is an 8 year old message. I'm in the same boat. How are you today? Love to hear about your journey.

Mary A. Byron I’m sorry if you’ve had a bad experience with investors. I am happy to say that 8 years later it is easier to spot charlatans due to the advancements in digital research.

Here are 3 suggestions:

1. Insist on Tax Id #’s, etc. Legit investors must report losses and gains to the IRS. Serious investors should be able and willing to provide evidence of financial integrity.

2. Find Legit investors by simply looking at the end credits of films. Investor groups are always named. Do LinkedIn searches and carefully cross-check details.

3. Do you have any friends in the Banking Industry? If you see an Investor, ask your friends to research their financial conduct.

Hope this helps! Feel free to ask for help in the Producers Lounge as well. Many film producers on Stage 32 have connections to vetted investors. Also Stage 32 offers webinars to identify sources of investors.

Good Luck!

We also have several attorneys on Stage 32 who can probably help you identify a good investor from a fake.