Film Financing

Fail early.  Fail often.  Experience is worth more than anything, and failure can be even more valuable than success.

When we were just getting started, we were searching for anyone living and breathing to pitch our project to.  We got recommended by a friend to this group:  Film Angels They say that they’re “The world’s first professional Angel Investor group for independent film.”  Pretty sweet, right?  It’s based in the Bay Area, so there’s plenty of access to money.  It’s run by a guy named Thomas Trenker who is also the founder of the IIFF (International Institute for Film Financing).  They’ve got a huge group on LinkedIn, and you can get on the mailing list for their events in San Francisco, Los Angeles, and New York.  If you’re just getting started and you live in these areas, you should check out one of the events.  That’s how Tess and I got our foot in the door to pitch to the Film Angels.

We travelled up to San Francisco on a spur-of-the-moment decision back in September 2008, specifically to get our business plan in the hands of Thomas Trenker.  It was a long way to go, but at the beginning you have to make bold actions or nothing will ever happen.  The IIFF meeting was interesting.  Thomas has a great presentation he does after all the other speakers which is specifically about movie profitability.  He’s a numbers guy, so he had like 25 slides on what the best movies to invest in are – all told from the perspective of an investor.  And, to our astonishment (not really, we did a lot of research), the #1 genre and budget-level movie he recommended investing in was exactly the movie we had.

We were so giddy that as soon as his presentation ended I raced up there with our business plan, handed it to him, and said “This is exactly what you just pitched.  Point by point, this is it.”  He scanned it and was instantly impressed with the package we had.  On the spot, he asked me if we could come pitch to the Film Angels.  BOOYAH!  Tess and I had to celebrate with a Ghirardelli Sundae.

Our pitch, however, didn’t happen until mid-December.  It was a long time, and we did pursue other things during that time, but this was the opportunity we were really looking forward to.  It was such a perfect fit, you know?  Here we had the exact kind of movie that the head of the Film Angles had said was the best investment to make!  We assumed that, if we nailed the pitch, he’d recommend the project and that’d get us moving.  Right?

Enter Mid-December in San Francisco.

The location for the pitch was this uber-chichi little place on the outskirts of downtown.  They didn’t have fireplaces there but had flatscreen televisions each showing a fire burning in a fireplace.  These were all over, even in the bathrooms.  They had retro couches like the spaceship furniture in 2001: A Space Odyssey.  There was a bar where the owner of the joint poured us some wine and I talked to him about his second house in Tahoe and skiing in the winter while we waited for the pitch before us to finish.

The pitch room was a small little theater with stadium seating and lavish couches.  It really only sat about 10 people. The screen filled the entire width of the room so that when they turned our powerpoint presentation on we couldn’t stand to present without the projector blasting us in our eyes and having our shadows block the screen.

So Tess and I pitched the project to this small group of people.  Thomas Trenker wasn’t present.  We had pitched quite a bit before for a number of different projects at USC, so we knew how to prepare ourselves.  The key with a pitch is that you have to know your material by heart.  Not in a memorization way, but you honestly have to know everything, understand everything, and also know your presentation by heart.  If you memorize, guess what happens?  Your eyes move back and forth as you talk because you’re literally re-reading the text that you memorized.  And the moment you get distracted by just the tiniest bit, you’re screwed.   We had it down pretty good.

This preparation, however, is only useful when people listen.  Our audience at this pitch were all laying back in their stadium-seating sofas, wine in hand, and it was dark – definitely the worst conditions ever for a pitch.  You want a bright room where people are sitting up, alert, and haven’t had a few glasses of wine.  Tess and I recognized this early on, and it just got worse.

It really became clear to us that nobody was serious about anything.  About 2/3 of the way through the pitch these two drunken investors stumbled their way back into the room and interrupted us saying, “Who’s your cast?”   Get the hell out of here you ass hole! That’s what I wanted to say.  But I just said, “We don’t have anyone yet.”  We didn’t (that was one of our mistakes).  They then laughed and snickered private jokes for the rest of the pitch.  Incredibly rude, and in retrospect we should have said something.

At some point a guy in the back who had two different types of scarfs wrapped around his neck corrected us when we were explaining our distribution strategy involved four-walling a theater to exhibit the film for distributors who had already expressed interest in the project.  “Four-walling is also called self distribution.”   He said it to make himself sound smart to the other people in the room.   Nevermind the fact that if he was listening to us he would have known that four-walling meant that we were renting a theater out (aka:  four-walling).  I actually don’t think anyone else in the room knew he was wrong anyway.

When we finished the pitch, there was an eerie stillness.  Just to break the awkwardness one lady asked us if we had presales in place, which is a ridiculous question based on the fact that we didn’t have any cast attached.  Even if we did, I know know that it wouldn’t have meant a damn thing.

As we walked out of the room, a few things were abudandtly clear to me.  First, these people had never seen Thomas Trenker’s presentation on movie profitability, and in fact probably knew next to nothing about movie profitability.  Second, they didn’t care about movie profitability because they weren’t going to invest in any movies.  This was a get-together.

Sadly, there was a single thing that probably would have made a difference.  Remember the guy who asked who the cast was?  He wanted to rub shoulders with celebrities, and tell his buddies he’s financing a movie starring so-and-so.  If we could have answered him with a legit name or two who were attached, the conversation might have been different.  Cast matters.

Here’s the irony though.  Good projects draw good talent.  How do you sign talent?  Money.  How do you get money?  Have talent or distribution.  How do you get distribution?  Have talent.  How do you sign talent?  Money.  How do you get money?  Have talent or distribution.  How do you get distribution?  Have talent.  How do you sign talent?  Money.  How do you get money?  Have talent or distribution.  How do you get distribution?  Have talent….

To this day, I don’t know a single project that’s been financed through this group – and that nearly was two years ago.  Spectator Investors.  Some of them have the money, others don’t.  I don’t believe Thomas Trenker has any financial position to invest in anything, and he just arranged this group because he wishes investors would invest.  But they want something that doesn’t exist, so they never invest.

Don’t misinterpret this as a complaint because, honestly, these guys don’t intend to be pulling your leg.  They just don’t realize what they’re doing, and often the people pitching to them don’t realize it either.  We were only half aware, and in retrospect there were plenty of elements we didn’t understand or know about during the pitch.

The key to this post is this:

Despite the depressing reality of this experience, I would recommend everyone go through it. How else will you learn?  How else will you know when you meet a legit investor?

This story does have a happy ending.   Film Angels offered us two pitches that night – the other was in Palo Alto (aka: the heart of Silicon Valley).   There we met a guy who didn’t have the money to invest, but has an unbelievable passion for movies and has become a great friend who has commited himself to helping get the film financed.

The Palo Alto pitch will be the subject of the next post on this topic.  See, out of darkness can come light!

Unfortunately, we are starting this blog about a year and half late.  Oh I’m sure there is a stack of ridiculous experiences ahead of us that will be great fun to read, but there are plenty that I wish we’d have catalogued before now.  But since we have to start somewhere, I will begin by retelling the story where I got the first inkling that we should be recording all this down somewhere:
<blockquote>Back in March of 2009, when we were just beginning the epic journey of learning how to get a film financed, we had a pitch trip to Silicon Valley for our feature <strong>A Touch of Magic. </strong>This is a comedy/fantasy film for families whose main characters are a Magician who doesn’t believe in magic, and a 10-year old girl with real magical powers.

The first scheduled pitch meeting was at the home of the soon-to-be-ex-wife of a billionaire (who would be a billionaire herself after the divorce).  She is a big movie fan, is heavily involved in Cinequest, and definitely has an apetite for getting involved in the film industry.  And most importantly, she has an 11 year-old daughter who loves fantasy movies.  Perfect fit, right?  No-brainer right?

All decked out in our pitch clothes that say “we’re creative but we’re know business,” we knocked on her door at the exact minute scheduled…  15 minutes later, nobody had answered the door.  5 minutes later, with our car engine running and my foot an inch away from the gas pedal which would get us the hell out of this demeaning experience, a black mercedes SUV pulled into the driveway.  She piled out with her 11-year old, and looked at us as if we were robbers casing the place.

So… we got out, introduced ourselves, and discovered fairly quickly that she had completely forgotten about us (which tells you how interested she actually was).  She loves movies, especially family-oriented fantasy movies.  What a coincidence!  That’s what we had!

“Is it a 3D movie?  That’s what everyone wants to see now, you know!”

… uh, this is a $2.5M film… “That’s true, but we also think people are really more interested in seeing good movies with a lot of fantasy and imagination.”

“My daughter can’t get enough of that stuff.”  – this is where her daughter, who was very outspoken about her opinions of fantasy, intervened and began to tell me the story of the latest book she was reading, which she can’t wait to see as a movie.  I made the mistake of saying “Oh man, I think you’d love our story!”

“Can she read the script?  She loves Harry Potter and Twilight.  And she’s a really good judge.”

….uh.. she’s eleven… and it’s a script, not a book… or even a movie…  “Why sure she can! We’d love to hear what she thinks!”

5 minutes later, we were back in the car.  We had just pitched a billionaire while standing on the street in front of her house, who had forgotten she agreed to meet with us, who had absolutely no knowledge about the movie business, and who, it now appeared, would judge the film based on whether her 11 year old liked the script.</blockquote>
It was on the drive back to the hotel, after a few hours of laughter and consolation between each other, that I said, “We should be documenting this.  Seriously, damnit!  We should get a camera and make a documentary about our experiences learning how to get a film financed!”  You can see how well we followed up on that idea.

By the way, apparently the day after we met them they left on a vacation to Cabo for… a month.  We didn’t try to make contact.