12 Motivations for Investors in Film (John Cones Series: Part 6 of 6)

I had the pleasure of sharing a panel at the Hollywood Black Film Festival with John Cones - entertainment attorney who's worked extensively with independent producers and filmmakers.  While I emphasized the importance of audience-building and the role of fans as a contribution-based funding source, John focused on the role of passive and active investors as an equity-based funding source.  Together, both are complementary sources.

Filmmakers rarely raise money from one source.  Debt, equity, grants, fan funding, tax credits, rebates, and more are all sources filmmakers can tap at once.  Check out the "Show Me The Money Forum" to discuss the hybrid approach with IndieGoGo members. 

What follows is Part 1 of a Special 6-Part Weekly Series in the DIWO Download on equity-based film finance sources from John Cones.

• Part 1: Five Most Common Film Finance/Distribution Scenarios
• Part 2: Two Types of Equity-Based Film Funding Sources
• Part 3: How Filmmakers Can Avoid the Business Plan Scam
• Part 4: Business Plans vs. Securities Offering Disclosure Documentation
• Part 5: Securities Offering Disclosure Checklist & Fee Schedule
• Part 6: 12 Motivations for Investing in Film

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Part 6: 12 Motivations for Investors in Film

By John W. Cones, Attorney .

The key factor that helps independent feature film producers in finding investors or other individuals who may help find investors is investor motivation. First do some brainstorming with your associates regarding what might motivate anyone with money to invest some of it in your high risk venture. There may be others besides those listed below that are unique to a specific film project, but a fairly good list of possible investor motivation follows. Some of these descriptions of investor motivation are closely related and may even overlap. 

The Prospective Investor:

1. Is interested in supporting the filmmaker’s career (career support)
2. Is enamored with the glamor of the film industry (glamour of film industry)
3. Feels the investment has a certain amount of “cocktail chatter” value, that is, it’s more interesting and fun to talk about than most boring investments (cocktail chatter value)
4. Wants to be able to spend some time on the set and rub elbows with the cast and crew, although this needs to be carefully controlled so that it does not get out of hand (associate)
5. Wants to use this investment as an opportunity to learn about how the film industry works, so that he or she can get more involved in the future (learning experience)
6. Has a son, daughter, niece or nephew who can appear as an extra in the movie (film extras)
7. May want to appear in the movie as an actor or actress (appear in movie)
8. May (in rare and unusual circumstances) be allowed to direct the movie (directing)
9. May thereby get his or her script produced (screenwriter)
10. Realizes that by investing in the movie, it will help bring the movie to a specific locale which will benefit the local economy (local economy)
11. Is very interested in one or more of the messages being communicated by the movie (movie message)
12. Is looking at the upside potential for making money on the investment even though the investor recognizes investing in independent films is highly risky

Of course, enterprising filmmakers may be able to come up with other descriptions of investor motivation that could be added to this list.

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About John Cones

John Cones is a securities/entertainment attorney who has practiced in Los Angeles and area for nineteen years advising independent feature film producers and others on matters relating to investor financing of feature film and other entertainment projects. He has prepared or participated in the preparation of business plans and/or the required securities disclosure documents, along with Blue Sky compliance for more than 250 such offerings during this period, including public and private production¬money offerings for feature films, television pilots, documentaries, music projects, infomercials, live stage plays and Internet companies. Some 50 feature and documentary films have been produced by his clients with securities offering materials he has prepared. Other such offerings have been conducted for development, packaging, completion and distribution funding. In a broader sense, Mr. Cones also works with entrepreneurs on investor financing of business startups. 

Mr. Cones has lectured more than 300 times to an aggregate audience of approximately 5,400 on topics relating to film finance and distribution for the American Film Institute, the UCLA graduate level Independent Producers Program, UCLA Extension, The USC Cinema/TV School, the USC Cinema/TV Alumni Association, IFP/West, American University (Washington, D.C.), the Nashville Bar Association, Cal Western School of Law, The University of Texas Entertainment Law Institute, North Carolina School of the Arts, California Lawyers for the Arts and other film industry organizations. He has also published several books and articles on those same topics including Film Finance and Distribution¬¬A Dictionary of Terms, Film Industry Contracts, 43 Ways to Finance Your Film, The Feature Film Distribution Deal and How the Movie Wars Were Won. He also hosts a Q&A Internet site about investor financing of entertainment projects at http://www/mecfilms.com/guide4.htm and maintains a web site at http://www.mecfilms.com/coneslaw. 

John is a member of the California and Texas bar associations and the Independent Feature Project/West.  He can be reached at jwc6774 at roadrunner dot com.