Indie Film Financing

Independent filmmakers normally have interesting stories about how they made it to the big screen.  Blood, sweat, and tears literally make the movie, and the stories inspire new filmmakers to follow suit.  The many forms of financing for independent films are slate financing, equity financing, hedge funding, bank financing, crowd funding, product placement, and many more that are even more convoluted.  The Raindance Film Festival explains the various forms of film financing here.
The above article points out that any filmmaker should always have a business plan before seeking any funding.  Some unique financing strategies listed in the article include putting together unique music for the film and deferals.

1. Music – With this strategy, film producers would land a well-known musician to compose the film score.  The musician’s name would be used to promote the film.  Such examples of this are Pharrell Williams/Despicable Me and Jay Z/Great Gasby.
2. Deferment – This strategy involves paying key people and firms on the back end, after the film brings in revenue.

A website called www.SecondMarket.com provides more loan related insight on film financing.  The following widely used forms of financing are also unique:

1. Pre-sales – Pre-sales is a minimum guarantee usually provided by a distribution company that has access to various markets.  The payment is usually delivered in the form of a check to the producer of the film.  The disadvantage of this channel is the packager and sales agents make commission off the sale.
2. Gap-financing – This form of financing is used to bridge the last “gap” of funds that are needed to finish the project.  These funds are usually provided by a bank and they range from 10%-20% of the film’s budget.  Larger, riskier gap funds can be up to 35% of the film’s budget.

With all of the different types of funding, filmmakers find interesting ways to find money to produce their film.  A great example of hard work put behind a film’s production is the film The Butler. With an all-star cast from Oprah  Winfrey, Forest Whitaker, Lenny Kravitz, Jane Fonda, Mariah Carey, David Banner, Terrance Howard, Cuba Gooding Jr., Robin Williams, Live Schreiber, and many more, the movie attracts interest in many markets.  However, the all-star cast is not the unique aspect of this independent feature film.  The film raised money through forty-one producers, including a Ukrainian billionaire, a retired professional athlete, and numerous African American celebrities.  Each producer raised their own funds to put towards the film, and the world is awaiting its success. The Butler debuted August 16, 2013. So far, it grossed $8.3 million on its opening day. View the trailer below!

Sources: Trailer

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http://www.dailymail.co.uk/news/article-2394397/Lee-Daniels-The-Butler--The-film-FORTY-ONE-producers-How-host-stars-entrepreneurs-raised-30m-fund-The-Butler.html
https://www.secondmarket.com/education/wp-content/uploads/2012/11/Key-Considerations-in-Film-Finance.pdf
http://www.raindance.org/10-routes-to-finance-your-film/