ASK & DISCUSS
INDEXURGENT: What percentage of gross proceeds should go to these financiers?
12 years, 1 month ago - Jinan C
I did consult with a lawyer about my contract, but I just want shooters advice on this (or on what you personally would think is "fair"):
The only film funders (let's call them FUNDERS A) I have for a feature film I'm producing/directing, are offering the rough equivalent of 30% of the overall budget.
The remainder of this "overall budget" is the money that I've put in (amounting to about 10%) and the outstanding finance needed to complete the film, which amounts to roughly 60%.
If FUNDERS A had been the only financiers of the film, I understand that I would probably be looking at splitting the proceeds (which in the contract are only for a period of 4 years) 50/50.
But they are not going to be the only funders, I'll be crowd-sourcing, and the amount I hope to raise (if I'm lucky), will be almost double the amount that FUNDERS A are putting in, as an equity investment.
So how should the 50/50 ratio change in a way that is fair to both parties - i.e. what percentage should I expect to give FUNDERS A for the 4 years?
If anybody can chime in (I obviously won't hold you responsible!) as soon as you read this, that would be great. I could really do with the advice in the next 10 hours!
Thanks
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12 years, 1 month ago - Paddy Robinson-Griffin
Sounds like you need to sit down with professionals, ask your lawyers for advice re structuring the agreement so crowd funded revenue raised etc doesn't go to funders. Impossible to say what's an appropriate percentage, it is only ever what's right for you. If they aren't recouping 100+% of their investment at 100% of gross before going to a split they are taking a bigger punt.
My gut says to negotiate, and put in your own financial structure so you don't inadvertently end up signing away more than 100% of your receipts with different structures.
Response from 12 years, 1 month ago - Paddy Robinson-Griffin SHOW
12 years, 1 month ago - Jinan C
Thank you Paddy. As it turns out, you're not too late!
My understanding from the contract is that it is a straight percentage cut. In the recoupment schedule, it is written that the funding is pro rata pari passu on an annual basis (at the same time and a proportionate rate) alongside other investors in the project.
It is an equity investment and they are (as per the contract) entitled to a portion of Gross proceeds (if any) from any sales revenue generated from the film for a period of 4 years from the premiere at their affiliated festival.
So the phrase "if any", regarding revenus, to me, suggests that they accept they may not recoup their money.
On this information, is there a percentage cut you can advise me to reasonably expect to settle on?
Response from 12 years, 1 month ago - Jinan C SHOW
12 years, 1 month ago - Paddy Robinson-Griffin
Alas 2 hours too late in my response, but if it helps, every film is financed differently and it is always a mess. If they are first money in, they are taking the biggest risk, it is the hardest to get, so should be rewarded as such. You're offering them a percentage you say, is that a straight percentage, or a percentage split after they have recouped say 110% from 100% of gross receipts first, which would be more common (and less risky for them)?
In essence, you may find you do some harsh deals along the way. Can you make enough from the crowd source to buy out you funders, then go back to then or others later for gap finance or to cashflow tax credits?
Response from 12 years, 1 month ago - Paddy Robinson-Griffin SHOW
12 years, 1 month ago - Jinan C
The only other issue is that if I get the additional finance, it is through crowd-sourcing, and not through an investor who will also expect a cut! Does that leave it wide open to them?
What percentage should I expect to give FUNDERS A then?
Best
Response from 12 years, 1 month ago - Jinan C SHOW