HOW-TO, Techniques, & Best Practices Channel

Bill Vartorella has taught screenwriting, negotiated successful television and incentive deals, and offered advice for state and international tax incentive packages for motion picture production. He is the co-author of "Funding Exploration" and articles and professional papers worldwide across a wide range of topics including college television studio construction, film production in Central Europe, and global motorsports sponsorships. He can be reached at Craig and Vartorella, Inc., PO Box 1376, Camden, South Carolina, 29021, USA, and globebiz[at]juno[dot]com.

The phone rings and a �voice� says she and a couple of friends may want to invest in your indie film project. Your pitch will be over lunch on Monday. One hour. You hang up. Adrenaline rush. You call your friends. They arrivewith jug wine. It�s Friday night and lunch is in three days. Euphoria turns to panic. This is your first �pitch� to potential investors. It�s your first film. You fear it could also be your �last,� if the pitch doesn�t go well.

You review your materials.

Here�s a checklist:
� Logline (a brief description of your screenplay) & treatment.
� Rough reading script.
� One-page film budget. (Also, ideally a cash flow chart, with emphasis on, say, the key five months.)
� Limited Liability Company (LLC) that your attorney put together for you that provides reasonable legal structure.
� Timeline, once the money hits escrow
� Commitments from crew and aspiring actors. (With crew, investors will love seeing a "flat buyout" that guarantees crew rates and avoids overtime charges. With actors � and crew � if possible, defer their payments.)
� Your reel from film school (or maybe a trailer for this project with money you scrounged) or your film-related vita.

In short, you have a rough Executive Summary, plus several "leave-behinds." Logline is key, but most producers aren't likely to hand over a reading script, as it tends to raise more questions (and critics) than answers. Also, your vita may be little more than an introduction to you as a person, your aspirations, etc. That's fine.

People give money to people, not to ideas. You probably have, say, five pages of business details plus a nicely-crafted "great premise."

Here�s the �hard part� of the checklist:

1. A proven, practiced �elevator pitch� concerning your �Eureka screenplay,� genre, comparable films, etc. Make it engaging. Make it electrifying. Make it simple. Gen. Dwight D. Eisenhower invaded Europe based on a one-page summary. Summarize your project, how much you need, and when in less than five minutes. Keep it light, not forced. Investors want you to be the new media darling, not the �hunger artist.� They also want to see how you handle business folks. This is more than a business pitch; it�s an audition.

2. A pre-qualified film project in the State where you intend to shoot. If necessary, your first telephone call on Monday morning is to the State�s Film Office. Give them your pitch, tell them you have a reading script and financials, legal structure, etc. Tell them you have tentative plans to shoot your film in their state and that you want to �pre-qualify� your film so that you and your investors can take advantage of the state�s film, tax, and any job creation incentives, etc. Have them e-mail the materials to you soonest and get them to your attorney for �review.� Making this call enables you to say, truthfully, that you are in the process of getting the project pre-qualified in the state where you intend to shoot and your attorney is evaluating the investor and other film incentives. (In short, you�re looking out for the investors.)

3. Distribution: generally speaking, it�s easier to get a fairer distribution deal if you have some kind of finished product to show. Distribution deals can be draconian.

A film in the can is a bird in the hand in distributor negotiations. If you don�t have a distribution deal, it�s not the end of the world (yet).

It�s now Monday. Show time.

Don�t go alone. Take, for example, your co-producer to help field questions and for another POV, post-meeting.

The structure of the one-hour investor lunch looks like this:

1. Tell them who you are. Segway to the elevator pitch. Then lay out the investment deal. (10 minutes, max). Practice this with friends. Fine tune, alone, in front of a mirror.

2. Address concerns / questions. (30 minutes). Your mantra is how to get the best marketable, creative product, with cost-savings. (Give them a quick lesson on the use of stock footage, discounts, purchase of unused �expendibles� � gels, etc., from other producers, shoot �expensive� actors on consecutive days, �down time� reduction, location tricks � let them know you�re knowledgeable on saving investor dollars).

3. Move toward consensus (test for deal closure). (10 minutes)

4. Set an action agenda. (10 minutes).

Some conservative advice:

1. Don�t overwhelm the potential investors over lunch. This is a �meet-and-greet� with the overall agenda a substantive next meeting in an office. Make your pitch, refer to the �leave-behinds�, and spend most of the time listening and answering questions, as per above.
2. If you do have a trailer, the chance of it working at a dining table in a busy restaurant is roughly zero. (Been there, seen that.) Moreover, lighting won�t be optimum and nobody wants to squirm around and squint into a laptop.
3. Be time conscious, no matter how interested the investors appear. The longer you are there, the more opportunity for a misstep (e.g., trying to answer questions that really should be addressed by an entertainment attorney or your CPA). Less is more.
4. Investors expect to be asked for the money. Film is tricky, because everyone has heard the horror stories. �Monte Carlo� film economic scenarios say 1/3rd of all films make a little money, 1/3rd break even, and 1/3rd lose money. Indie films have a strong reputation for coming in on-time, on-budget more than 90% of the time. Say that�s your goal. Come in on-time, on-budget and strive to be one of the 66% that break even or do slightly better. Plus, depending upon the State where you shoot, investor risk may be reduced nicely by the investor film incentives. That�s the best they can expect.
(Note: Ask your entertainment attorney and CPA for specific advice, re: above.)
5. Set an �action agenda.� You will be asked questions you cannot or should not answer (legal, etc.). Say, �We�ll have more detailed financials and the film investor legal opinion to you by �xyz�.� Ask, how long do you think it will take for them, their attorney, and CPA to review them? Offer to meet them in their offices. Ask who else will be in the meetings, and who and what you should bring.

In marketing terms, this is a �presentation cycle� comprised of
(1) Establishing Need. (Teen/tween and fantasy films are a hot commodity. The �Harry Potter� films have overtaken �James Bond� as the all-time box office franchise, etc.)
(2) Presenting (your film �pitch�).
(3) Proving (�our approach is conservative with few locations and manageable costs as noted here�) and
(4) Closing. (�We need X-dollars and can meet our production schedule if we can begin to draw Y-dollars by June 10�). Essentially, you will describe the project and tell the investor that the risk is manageable, how, and why.

You are going to get two kinds of concerns:
(2) Void Concerns (�All movies are structured to lose money.�)
(3) Valid Concerns (�How can you reduce our risks?�)
The first is dealt with using information; the second, benefits (�we�ll meet to discuss the State�s film investor incentives�).
These are usually expressed via investor �probes� � open, which may elicit a broad range of answers (vague questions get vague answers, so try to get specifics); directive � which are looking for yes or no (�will we make money?�); reflective � which ask for more information and allow you to create an action agenda for the next meeting.
Here�s the difficult part. You are trying to move toward consensus � closing the film deal � from the moment you sit down, even though the action agenda is for a more formal meeting to follow. One way to move the project forward is to ask for commitment on key points as they are raised and addressed. Here are simple examples that give investors hope that their money isn�t headed down a rat-hole or for some rum-soaked frolic in paradise.

�Draw-down schedule.�

Usually the first draw-down is small (10%), with the second (pre-production) and third (principal photography) large (say 40% each), and the final, post-production small (10%). It gives them some maneuverability at the beginning, plus there are the various forms of insurance, etc.

Another straight-forward example would be when and how investors recoup (in �first position�) and how you, as producer(s), are going to profit at the bottom of the food chain. Standard fare, but look at it from the investor perspective. You�re agreeing, from the beginning, to some major points: (1) investor monies deserve some built-in protection and (2) you make money, if any is to be made, after the investors become �whole� (initial investment) and first in line for profits. That sets a business tone and moves the discussion forward to the next meeting. Plus, you mention investors can monitor all expenditures online via a secure password/website. Do a �trial close� to see where you are: �Are we enough in agreement with the basics of the project and how the money is invested/spent to move forward?�� etc. If answer is �yes,� set an agenda for the next meeting and deadlines for due diligence and any unanswered questions. If the answer is �no,� you will need to �probe for clarity� on where the concerns lie.

Remember: the language of filmmaking is arcane and financial shenanigans are the stuff of legends. Investors need to buy-in on you as someone who is looking out for their interests. Finally, they could do worse. The chances of a car company investing in a new widget is 1 in 25,000.

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Check out this article in the November 2007 print edition of StudentFilmmakers magazine, page 50.

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