The film industry is currently in need of investors. More than ever, there are opportunities to raise capital for producing your film. Crowdfunding is a crucial channel for financing filmmakers.
Raising money for a film
Film making is time consuming and costly process. Unless you are rich, it is tough to get on with filmmaking without the help of investors and other sources. With the crowdfunding platforms at your disposal, it does not mean that you gain the immediate attention as desired. You have to work for its for successful results.
So let’s get on. Initially, define your project and what you need funding for. Also, you must be clear about the finance you require to develop your vision.
Crowdfunding sites for funding films
Crowdfunding platforms have turned into the primary source of film funding nowadays. The crowdfunding sites have made it easier to fund a film.
You can finance your project through public donations without depending on conventional financing methods such as banks or investors.
Crowdfunding turned into a popular means for funding ideas or projects. Even though you don’t have any connections in the industry, you can still raise money through crowdfunding. Crowdfunding surpasses the traditional means of funding which is time-consuming and complex.
Provide Incentives for donations
If it is turning tough to gain donations from your family and friends, the better way would be to give incentives for donating.
Lot many ways exist to give the incentives: present a thank you note or put up a video from an individual who benefitted from the donation. With incentives, people tend to be more interested in donating.
Know your equity crowdfunding for the film
Initially, know about how film financing works. You can use a crowdfunding platform to sell securities such as your film shares. The process involves investors who contribute monetary donations for profits, interest, or ownership of the film.
What is the capital that can be raised?
Like any crowdfunding, you can raise capital to the extent you can only do if you work hard. The amount that can be raised can extend to more than $1 M as an investment if done correctly. However, it would help if you had some assistance to attain it.
Before beginning a campaign, you have to think about the process. Independent filmmakers must be well prepared with the idea of crowdfunding. Approach an attorney before you start the process. Ensure that you follow Exchange Commission regulations and relevant securities.
SEC REGULATION D
Independent filmmakers have gaps that limit the money and time essential for registering your security sales with SEC. The equity funding via shares sale will not be possible through a typical filmmaker.
The SEC provides many registration exemptions through Regulation D. Filmmakers require understanding them as they might apply to you.
Get yourself familiarized with the following:
1. SEC Regulation Crowdfunding Law
2. SEC Regulation D, Rule 506 (b)
3. The SEC Regulation D, Rule 506 ©
The crowdfunding law is essential if you wish to perform a crowdfunding equity campaign for your first film. Startup businesses can raise a maximum of $1.07M through family, friends, and followers that are accredited or unaccredited as performed through a crowdfunding website with SEC registration. Thus, you can raise a lot of capital.
So, it is best to choose platforms that will help you raise equity capital and will help you go through the legal aspects of the process.
The crowdfunding site should provide all the required documentation required for equity crowdfunding. The platforms often charge a certain percentage of the total amount raised to make their money. However, there are a few benefits to experience with the platforms:
1. Provides legal documentation
2. Manages investor transactions
3. Showcases your project before the investors seeking an opportunity to invest
4. SEC-approved crowdfunding platform enables crowdfunding exemption
Now that you know the prerequisites, it is time to start an equity crowdfunding campaign. It would help if you approached a lawyer and an entertainment attorney who understands film financing.
What should it mean for the potential investors?
1. Organization background and the past success rate, if any
2. Film summary
3. Who are your film audience, and their details
4. List of business needs comprising of the cost related to the crew, cast, equipment requirements, and the location rentals
5. Information about the potential risks involved in the project
6. Complete details about how the funds will be utilized
7. Transparency for investors
Equity crowdfunding is a relatively new platform for raising funds for films. So, how to go about the process? Get associated with an attorney and start your plan. Later start a campaign on an equity crowdfunding website and raise funds successfully.