It all begins with an entrepreneur and an idea, usually one that nobody will fund because “it’s too risky”. OK, so not exactly. In film it usually starts with a script or a book. In many smaller budget indie films, the scriptwriter is often the director and main producer, meaning that they’re basically a one-man show. Usually filmmakers who think of themselves as entrepreneurs and not “creative types” are more likely to get their project off the ground.
You have to pitch to “the big boys”, but usually it’s usually small money that gets a project off the ground. Just like entrepreneurs here in Silicon Valley, who pitch too early and too often to “the big boys”, the venture capital firms on Sand Hill Road, so filmmakers end up pitching to studios. Like studios, VC firms will turn down most of the pitches they hear and invest in only a few per year. Like entrepreneurs, filmmakers who have been turned down have to find angels to invest in their projects. Many big budget films start off as options on literary properties. A few years ago I met one of the guys who bought the movie rights to Batman in 1980, and it took almost a whole decade before it became a big budget production. Of course, like entrepreneurs who take too much VC money and lose control of their company, this can happen if you go the standard Hollywood route. In this case, the original Batman rights holders lost control of the project creatively and financially. The alternative to studio money is to go the independent route, where filmmakers can keep more creative control and influence their productions.
- Later stage investments are less risky than earlier stage investments. While most of us in Silicon Valley know about startup investments – seed round, series A, series B, late stage, etc., I didn’t really understand that the same is true for film. The stages are a bit different – usually the development stage can begin even before the script has been written, then there’s pre-production, production, post-production, and then distribution – which involves p&a funds (print and advertising) for a theatrical release. It turns out that just like investing in a late stage company is usually less risky than investing in two guys and a business plan, so the later stage investments tend to be less risk - i.e. think DST’s investment in Facebook after it was already successful. In fact, there are entire funds dedicated to providing finishing funds for a film and p&a monies to films.
about distribution. While a few
startups succeed because they have a great product, most succeed because of
their distribution channels – getting a good product to the target market. The same is true of indie films – the films
which are successful financially are usually the ones who understand the
distribution side of the business and have a core audience that they are able
to reach. Not all films gets theatrical
distribution – this is a fact of the film industry, but film-makers who
understand this are the ones who are prepared for it. Most profits from most films actually come
from DVD releases, not the box office numbers that the press focuses on. Of course the more anticipated a film is, the easier it is to get the right distribution channels in place.
Stars are helpful,
but not necessary. In the startup world, VC’s love to invest in
entrepreneurs who’ve “been there and done that”. In films, it’s even more pronounced – even a
smaller budget indie film can benefit from having a star - think Bill Murray in Lost in Translation. But television stars can be a great boon to an
indie film too - in my upcoming film Knights
of Badassdom, we are lucky enough to have Peter Dinklage, who won an emmy
for Game of Thrones, along with Summer Glau, who made fan-boy fame in the Firefly and The Terminator: The Sarah Conner Chronicles and Ryan Kwanten, of True Blood fame.
The most innovative filmmakers are able to get B or C-list stars to make brief appearances in their films, and that’s enough to get the film going. But it’s also possible to have a breakout hit with no well known stars – think of Bend It Like Beckham, which launched the careers of Keira Kneightly and Parminder Nagra. The same is true of startups – while it would be nice to invest in Mark Zuckerburg’s new company (if he ever leaves Facebook), it’s probably more profitable (and likely) to invest in the next Mark Zuckerburg who’s starting the next big thing.
Labels: angel investing, executive producer, film angels, film industry, film making, films, game of thrones, independent films, knights of badassdom, peter dinklage, ryan kwanten, Startups, summer glau, Thrive