Money for Entrepreneurs

I was reading these tips from Eric Stevens on getting your Film Financed and found them very useful.

He has been in film finance  for over 10 years and   has come to learn methods that help aspiring films makers and independent  producers get financed and hopefully help  avoid the pitfalls he sees so often in this realm. He is pitched probably 3-5 films per week and he finds that  all have common mistakes.

E. Stevens states “Every film with only one exception is financed based on or along these lines. The exception is where the content has an emotional connection with the investor and they really don’t care about the rest.

1. Content: Obviously the story sells, and the genre has to be a money maker.

2. Attached talent: Many producers always tell me that such and such actor is attached but can’t get any paperwork. I understand the chicken or the egg situation here well. I know you can’t get a play or pay agreement without money. You CAN get a LOI or letter of interest from managers, or agents. This basically states if all the stars align and money is there the client may do the film. It doesn’t seem like much but you know by the amount of work you have to do get it, it means a lot.

3. Budget: Below and above the line. If you don’t have one get one. Submit a top sheet with you business plan. If you have one scrutinize it, have a line producer look it over. TRIM THE FAT!! With the technology advancements CGI and animation does wonders.

4. Distribution: This is always an obstacle for ANY producer. Some of my clients see this as their biggest obstacle. Why? The risk involved..preselling territories costs a lot in the way of equity as their is no finished product to view. However, a lot of times you need it to get the investors. DO a mix, get a commitment on some territories while leaving others open.

5. Financial structure: Most of you already know this but I will say it anyway. Each film must be setup as its own corporate entity. LLC, C Corp, Partnership, that’s for your attorneys to decide.

The way I have always suggested moving forward is doing a debt/equity mix or debt with an equity kicker. NEVER let your debt be over 30% of your budget. This will turn off any potential investor. While you are telling them they are in first position they know debt always takes first.

Usually what this means is that you can finance part of your film or slate, but the debt money isn’t kicked in until proof of funds on the equity portion is provided.

Take advantage of incentives in place! In the U.S. and some parts of Asia there are a lot of incentives for producing your film in that territory. For the EU I would venture to guess there are some, but I honestly just don’t know about them.

Look for states offering incentives for filming there. BUT BEWARE.. there are caps, and you must use their state citizens or you get no credit for those dollars expended. This has a lot to do with your above the lines costs which account for a good portion of any budget.

There are federal tax incentives to up to 15-20 million. Check them out.

Finally IRR. I see coupons issued for 115%, I see shares issued giving away the farm to investors.

How do you value your film. BE HONEST! first of all. IMDB is a valuable tool. Run your talent and see how much the films they are in pull in. Do genre comparisons. Look carefully at your distribution. Can the content be easily translated for other markets? Are the stars well received overseas?

Finally if you can offer a slate. Investors like to spread their odds. especially where you can use the same assets to produce additional platforms like games, and sequels.

There is no better time for film investments than now. It is the safest out there when the studios are begging for financing and short for content. This creates a void you can fill.

If anything movies will increase this year and next. People simply can’t afford to do other things and need the escape a good story gives them.”

Coming to you from the voice of a financeer.

THE MOST IMPORTANT JOB IS THAT OF LEARNING HOW TO NEGOTIATE WITH OTHERS WITHOUT FRICTION, SPECIALLY IF YOU ARE TRYING TO GET FUNDS FROM ANGEL INVESTORS OR VC FIRMS.

Experts in negotiation handle the process so smoothly that discussions hardly seem like negotiations at all. And they get their point across fast and with tact. While the word negotiation itself conjures up visions of cigar-chomping adversaries pounding the table to emphasize their demands, the best results are achieved when all the parties involved are able to put themselves in the others’ shoes and arrive at an agreement that is beneficial to everyone involved. It has to be a win-win situation.

Whether you are negotiating a selling part of your company, a higher salary, a new job,  the acquisition or merger of a company, your chances of success are far greater when you approach the situation positively and with a clear objective in mind.

It also helps to understand the motives of others involved and to have in-depth knowledge of the subject under discussion. Angel Investors, VC firms, fund managers  for the most part, are sophisticated business people, so you need to cut the small talk and get to the substance. No one has time to waste.

Finally, approach every topic with an open mind-don’t simply try to bully others into accepting your proposal or point of view.

You will get funded faster when you apply all this.

I read a great article from one of my favorite Entrepreneur Magazines: INC.

http://www.inc.com/magazine/20090101/angel-investing-2009.html

Angel Investing 2009

By: Kasey Wehrum

In a tough economy, angel investors are more cautious than ever. But it’s still possible to find funding. Here’s how

Where would we be without angel investors? In 2007, 258,200 angels pumped $26 billion into 57,120 companies, making these wealthy individuals the single largest source of start-up capital, according to the University of New Hampshire’s Center for Venture Research. But despite their ethereal name, angel investors are all too human. Their money comes from their investment portfolios, and theirs, just like yours, have been hammered. That’s sparking big changes in the way angels invest. Even in a tough economy, deals can still be done, but don’t expect them to happen in a hurry. Angels are pretty spooked these days. “Even highly diversified investors may be seeing a 20 to 40 percent decrease in the value of their stock portfolios,” says Michael Gruber, founder and managing director of Cornerstone Angels, a Chicago-based angel group. Further complicating matters is the fact that many angels are entrepreneurs themselves and may be more concerned with shoring up their companies than with helping you build yours.

As a result, they are being a lot more cautious than they have been in years past. The Center for Venture Research says investments through the second quarter of 2008 totaled $12.4 billion, up 4.2 percent from the same period in 2007. But just 23,000 ventures received those funds, a 3.8 percent drop. Why? “There’s safety in numbers,” says Marianne Hudson, executive director of the Angel Capital Association. Angels, she says, see syndication not only as a way of reducing risk but also as a means of ensuring that good companies are properly funded.

If you are looking for funds, be prepared for a buyer’s market. That means requests for more control as well as lower valuations. “I’m not saying we are going to be angels from hell, but we are not going to be stupid about how to price,” says John May, managing partner of New Vantage Group in Vienna, Virginia. On the other hand, says Bill Warner, chairman of the Triangle Accredited Capital Forum in North Carolina, “no angel wants to put an entrepreneur in the position of not being able to reap benefits from a successful exit.”

It is true, we have many Investors’ requests for projects. There is still a lot of money around, and Angel Investors know that they can have a better ROI investing in companies than in the Stock Market. However they are being a lot more careful.

We are  constantly asked what  the difference is between the registrations that we offer.

And we are always looking to build quality relationships that can benefit all parties.

So here is  an explanation of our Clients/Users:

Investors: are qualified individuals and groups of Angel Investors as well as private and corporate investment funds, any type of company that provides different types of funding worldwide  and are actively looking to fund companies.

Companies: entrepreneurs/companies that are looking for capital to start, grow, expand, merge or be acquired. We have access to a large deal flow from quality companies in all stages of development and in different industries worldwide.

Affiliates: individuals or businesses that are interested in referring Clients/Users to us whether it be companies or Investors.

Preferred Businesses: businesses that offer services that any of our Users can benefit from.  These could be attorneys, accountants, business plan writers, insurance agents, business consultants and many others.

If you are an Investor, you can register at:

http://fundsforprojects.com/listings/register_investor.php

In order for Investors to gain  access to certain specific projects, we may require proof of funds and the place of origin of such. After we receive all information and approve it, we will custom compile a portfolio of companies that fit each Investor’s criteria.

To register as a Company: If it is a company/project that we are actively looking for, there is no charge to register it with us, so that we can present it to Investors. If it is an unsolicited project, then any company can register their project online and choose for how long they want to attempt to find funding through us.

Here is the link to register your project with us:

http://fundsforprojects.com/listings/register_company.php

To register as an Affiliate: there is no charge. This affiliate will be added to our system in order to trace which Investors and/or Companies are registering through the Affiliate.

To register as an affiliate:

http://fundsforprojects.com/listings/register_affiliates.php

To register as a Preferred Business: there is a charge for this. Our other USERS will be able to contact these businesses via our platform and utilize the services that they offer. We actually link their information/website on our platform and when a USER has a need, they have access to those Preferred Businesses. If you are interested in being one of our Preferred Businesses, please send an email explaining the type of service that you offer to:

Services@fundsforprojects.com

And we will inform you  how to proceed.