How To Crowd Fund Your Film
This page is a short step-by-step guide to using the crowd-funding model that paid for The Age of Stupid. We hope you find it helpful. If you're not sure WHY you would want to crowd-fund your film, have a look at our Crowd-Funding FAQ.
HOW TO CROWD FUND YOUR FILM IN SIX EASY STEPS
1. Write a Crowd-Funding Budget
First things first. How much money do you need to make your film?
(You can see The Age of Stupid budget here.)
A few small tips on making your budget.
- Don’t kid yourself and be over optimistic with costs. It’ll only hurt more later.
- Always allow ten percent extra contingency in the budget as your project is bound to go over time and over budget.
- Try to keep your budget small. This is a matter of constant negotiation combined with begging, borrowing and scrimping over the course of the production. At the budgeting stage lots of the costs will be unknown but the best way to keep the budget small is to pay the crew low wages and sign them up to a deferred profit scheme instead. We paid all our crew about £60 per day as a survival rate and they deferred the difference between that and their typical full fee. So an Editor who is usually paid £1,500 per week would only get £300 per week in the hand (5 days at £60 per day) and would defer the other £1,200 each week. Whereas a Production Assistant (who would conventionally get £600 per week) was paid £300 on our film and then deferred £300 per week. Then we tracked each crew members pay to see how much they have deferred overall (weeks worked multiplied by amount deferred each week) and used this to work out what percentage of the profits each crew member is entitled to. Our film cost £450,000 to make but the crew deferred over one million pounds so if we didn’t have a deferred pay system we would have been forced to raise an extra million pounds. (There’s a really sweet added benefit because when you do eventually make a profit and you pay your crew back they are pleasantly surprised as they worked on the film because they believed in it, rather than for the money, so to get extra payments later is a real unexpected bonus).
- Don’t scrimp on quality. It’s fine to eat crap food but don’t take shortcuts on equipment. Get the best quality cameras / laptop / edit machine you can afford. You’ll have tonnes of technical problems anyway so you don’t want to be slowed down by boring computer /camera issues.
- Claim the Producers Tax credit from the government. You can get twenty five percent of your budget paid back to you if you apply successfully for the Producers Tax Credit. You have to certify your film as British (more here), be intending to have a theatrical release and then include extra information about whether expenses ‘qualify’ under the tax credit rules or not in your end of year tax return. It’s a difficult, and bureaucratic process
to get through but well worth it when the Inland Revenue sends you the cheque! (Necessary to work with a professional accounting firm for this and the whole process has to be audited independently.)
Once you know how much you need to raise, you can work out how many investors, each contributing a standard sum, it would take to make up the full amount. How much does the minimum investment sum need to be, and what are people going to get for their money?
The question of what percentage of the profits they get for their cash investment is crucial. Offer a bad deal to investors (ie too little percentage for too much cash) and nobody will put money in, but offer a great deal to investors (lots of the profits for not much cash) and you’re short changing yourself, your crew and your production company.
Our Investment levels:
STAGE MINIMUM NO OF ‘SHARES’ TOTAL RAISED
Stage 1 £500 100 £50,000
Stage 2 £5,000 40 £200,000
Stage 3 £5,000 40 £200,000
Final £10,000 15 £150,000
Raise the stakes as you go along. Obviously it’s much more risky to invest at the beginning of the project, when there are so many unknowns including if the film will be any good or even be finished, than at the end when people can see the film. To reflect this we upped the price of ‘shares’ as we went along.
For Stupid, the initial "unit" of investment was £500 - but that was when the film was nothing but some scribbles on a bit of paper and a twinkle in Franny's eye. Once the game was truly afoot and the production underway, the minimum investment sum was raised to £5,000. Now that we’ve finished people are paying £10,000 for the same percentage of profits they could have brought at the beginning for £1,000.
Our Percentage Profit Levels
STAGE MINIMUM % PROFITS
Stage 1 £500 0.05
Stage 2 £5,000 0.25
Stage 3 £5,000 0.25
Final £10,000 0.10
It is quite challenging to administer paying all the individual investors back - more than a couple of hundred and you could find yourself buried under the paperwork so you need to be super organised at every stage.
Donating - Always offer the option of donating rather than investing. Some people are not interested in getting their money back and this is the brilliant for you – money without any strings attached.
Syndicates - Individuals who couldn't raise the necessary cash themselves clubbed together to form syndicates and invested that way. In this instance it’s important to be clear with the syndicate that there will be one named individual who essentially buys the ‘share’ and who you deal with as you don’t want to be dealing with different people from one group. We suggested that syndicates have a letter or contract between their members to formally detail the agreement. You definitely don’t want to be dealing with groups who have fallen out or lost contact with each other for years to come.
Altogether, a total of 258 individuals and groups invested in The Age of Stupid. Any investment bought an on onscreen credit and a small percentage share in any profits. At one stage, when we were desperate for cash we offered people who invested £5,000 the chance to star in the film (no one was actually interested in this but you see but creative you can be with what you exchange for investments) You can read more about exactly what our investors were offered in our Crowd-Funding FAQs, or in the Crude Funding Plan which you can download at the bottom of this page.
2. Download our documents and adapt them for your project
At the bottom of this page you can download the various Funding Plans for the project, right through from Stage 1 where the minimum investment was £500 to the final round where the minimum investment was £10,000. You can use this as a model for writing up a Funding Plan for your own project, and then use that as the basis for your inspirational presentation pitch to potential funders (see 4). It should give you a really good idea of the kinds of things you need for a persuasive pitch.
You can also download a generic loan agreement letter at the bottom of this page. This is the legally binding document that sets out each party's obligations to the other. You'll need to go through it and enter the details of your project - it should be obvious where your details need to go. It's a UK-based, London-centric agreement that's designed to work with English law, so if you're not in the UK there may be additional changes to make before asking investors to sign it.
3. Get lawyers to check your documents
When we first came up with the crowd-funding idea and put it on our website our lawyer said “it’s the most innovative film financing scheme I’ve seen in 25 years. But it’s totally illegal”. We promptly made the changes he suggested to ensure it was all legit but shows how easy it is to flout the law (especially when you have no experience in this complex area and you’re making it up as you go along). There are lots of rules and regulations about soliciting for financial investments (and there’s bound to be more after the credit crunch) so you need to get a professional legal opinion on your plan and agreements. When we upped the investment level from £500 to £5,000 we got the plan approved by the Financial Services Authority (FSA), which gave investors confidence that we weren’t going to run away with their money. Again, it’s a time-consuming and bureaucratic process but makes it much easier to convince people who don’t already know and trust you to invest in your film. You can get this stamp of approval through specified legal firms. We used Bates, Wells & Braithwates who were extremely helpful & professional. If you can’t afford a lawyer try getting advice from the legal advice service own-it.org.
Important Notice. You have to add all sorts of caveats and warnings when you’re soliciting for funds – see our important notice for the kind of information it’s compulsory to include.
4. Pitch to anyone you even slightly know who is even remotely rich
Now you're ready with your crowd-funding pitch, you need a crowd of people with funds to pitch it to. Indulgent oligarchs with a strong philanthropic streak are your best bet, but sadly these can be somewhat thin on the ground.
To get things off the ground, you will need to take advantage of the networking opportunities provided by the magical world of the internet. One of the first things you should do is set up a website (or page on your production company site) for your film which people can visit, learn about the project in as much detail as necessary, and, hopefully, find out how to contact you and invest in it. Once you have a decent professional-looking web presence, it's time to get schmoozing via social networking sites like Facebook and Myspace, and firing off emails to any likely lists, friends, family, workmates, distant acquaintances etc etc.
If you are planning to make a campaigning film like The Age of Stupid, then you should definitely try to find a way to access the people out there who are already aware of and give a monkeys about the issue you want to highlight. If you can get some campaigners believing in your idea early on then they can be a huge help finding investors. You need to explain clearly why investing in your film is a strategic and cost-effective way to
further your cause.
If your subject is particularly obscure, or your film is taking a more neutral approach to it, then you will need to sell the idea to investors purely on its artistic merit and profit potential. Good luck!
Lots of individuals do not necessarily make a crowd of course; the best way to make a crowd is to invite all these people you want to give you money to come together at an event. Pitching in person to large groups of potential investors is the most effective method of raising funds - Stupid raised £37,000 in a single night like this right back at the start of the project:
Thanks to Mark Brown there for his very moving appeal for funds. (Also see Franny's diary entries on the terrifying first fundraising event, and on the slightly less whiteknuckle second fundraiser.) It’s important to make the most of these events and make it easy for people to invest on the spot; have your agreements ready for people to sign, get cheques off people on the night and hand out your bank details so people can make transfers as soon as they get home. If you have some rushes, test footage or perhaps some previous work you think is convincing, then you could put together a trailer and organise a screening to whet potential investors' appetites:
If not, then you'll need to put together an even more dazzling presentation on why your project is so incredibly worth investing in. (See Funding Plans below for how we convinced people to part with their cash.)
At one stage we were having weekly screenings for potential investors so bear in mind that you may need to do lots of these events before you get anywhere near your funding target!
Most investors wanted to meet Franny or Lizzie or at least speak to them on the phone before investing to ask about the likelihood of getting their money back. While it’s impossible to predict who well your film will do it’s important to be honest and tell people it’s a high risk investment – making money from documentaries is extremely difficult.
5. Spend the money on making your film
If you need instructions on how to do this then you are probably barking up the wrong tree altogether.
Obviously always try and get the best deals you possibly can and do things as cheaply as possible.
You can also use the deferred profit scheme to get amazing deals for services that would traditionally blow your budget. Archive usually costs about £3,000 per minute which no independent filmmaker can ever afford but if you approach the big archive houses with your plan, and offer them a share of the profits, they may just go for it. Both ITN & BBC gave us access to twenty minutes of archive for a share of the profits and a very low upfront cash payment.
6. Share out the loot
Don't forget to fulfill your commitments to all the investors and crew! If your film has achieved the statistically remote goal of actually turning a profit, then all the wonderful people who signed up to help make it happen will need to be remunerated in timely fashion. This is one of the only real drawbacks of the crowd-funding model - a fiendishly complex administrative hangover.
We’ve agreed to pay our crew & investors once a year for ten years and as there are so many people, and we don’t want to spend a month every year doing our accounts, we’re signing up with a Collection Agent. They take a fee (usually about 1% of all profits) to sort out all your payments each year, putting the money directly into peoples’ accounts.
Our Funders weren’t just financial backers. They provided all kinds of support, advice & practical help throughout the five year production. When we needed business clothes to wear for an interview with Shell one of our investors lent us hers, when Franny needed a quiet place to write the script we were inundated with offers of seaside houses and when we needed a quiet room to record the orchestra an investor offered their youth club in
Crucially they were always willing us on behind the scenes, often replying reassuringly to our distressed emailed within minutes, so we never felt lonely making the film.
Now that we’re promoting the film our investors are our best outreach marketing team telling all their friends, family & colleagues about it and even block booking cinemas for the opening night (thanks Anthony).
Note – Communication is Key
When people invest in your film they have become part of the team and you want them to feel as involved as possible. Add them to your mailing list, give them a page on your website, if they want one, and invite them to events whenever you can.
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