So, you’ve got the greatest idea in the world, eh? Okay, it’s not going anywhere without a lot of cash. No seriously, you need a lot of cash. A single pilot for a network studio television station is going to run you at least $3 million dollars. Studios aren’t going to throw around that kind of financing on a shaky investment. They’re looking to develop surefire shows. The only way to generate “surefire credibility” is to develop some really good products to pitch.
And that takes cash. So, how do we get as much as possible?
Crowdsourcing is a legitmate way to raise capital for a project. Assuming you’ve got the resources to put together a short, interesting video encapsulating your pitch, then you may want to consider asking the world for a few bucks. In short, a lot of people give you a few bucks a piece to help you to reach your goal. Millions, literally millions of dollars have been raised for all kinds of artistic projects. Here are a few of the big dogs you should know about:
So, you set a film finance fundraising goal and then promote the hell out of yourself online. With Kickstarter, you only get to keep the money if you meet or exceed your goal. Indiegogo allows you to keep whatever you raise. While Indiegogo sounds like a better deal, Kickstarter is larger and has a lot of great unique features. Assuming you’re producing a non-episodic project (as in, a movie, pilot, or other singular work of art) then these are a great starting spot for your fundraising efforts.
If you are creating something episodic (YouTube series, podcasts, monthly comic books, ongoing webseries, etc.), then you really should consider exploring Patreon.
Patreon allows your fans to give you a few dollars per episode. So, while it’s common to see people contribute $100 – $1000 at a time for Kickstarter and/or Indiegogo, it’s common to see people commit to $1 – $2 per show on Patreon.
While there are likely more out there than these 3, and you should definitely do your own research, these 3 sites are great because you can raise money without giving away any equity in your company.
If you’re open to the idea of giving away equity in your company, then it is possible to crowdsource equity financing as well. This is a very, very new concept and is still an industry in an a state of flux and upheaval. As such, you should check out and compare competing sites. You can find a good starting point for comparison here. Please understand, that crowdsourcing an offering of equity in your company is highly regulated by both state and federal lawmakers, and you should definitely talk to a lawyer before you start signing your company up for anything.
The lending industry is highly regulated and agreements will vary from the movies to television to music. However, there are some general strategies.
First, if you are able to secure an investor (angel or otherwise), and can secure a firm commitment to buy into your product, then you may be able to secure a loan on the strength of your paper. The paper is the commitment from your investor to purchase your product. So, a producer, studio, or very generous rich uncle may be the perfect person to take with you to the bank order to secure financing to bridge a liquidity gap.
Remember, nobody gives anything for free, and all savvy investors will demand limited liability for their investment. Liability can range from over-budget costs, on-set injuries, lapses in insurance, and other unforeseen events. These investors may wish to be limited partners in a limited partnership, passive members in a limited liability company, or stockholders in a corporation. Any of these types of corporate arrangements is worthy of a semester’s lecture in and of itself. Regardless, the producer or artist needs to set these legal entities up in order for investors to agree to hand over their money.
The economic interests of these investors are known as “securities.” These securities are regulated by strict laws at both the state and federal level. Generally speaking, indie movies and smaller shows will qualify for exemptions to the complex regulatory challenges. Larger investments require registration with the SEC and other organizations. You can learn more at the SEC’s website.
Of course, you never have to register your relations with your rich uncle. Pre-existing relationships are a major exception to the registration requirements. Again, make sure to reference the SEC and corresponding state’s registration requirements to determine your liability for giving and/or accepting cash when financing a movie, show, or other work of art.
Well, unless you’ve got a pile of cash sitting around, your only 2 options for raising money are to either beg or borrow for money. Of course, you can always steal, but Comcastro strongly encourages you to reconsider such a course of action.