Be very careful when asked to advance money or escrow money to any company or executive producer that promises to obtain funding or venture capital to back your film project. This is NOT how films are financed. There are many scams out there and it is unfortunate that people have been taken advantage of in all financial avenues.
Since the market has soured, several large real estate lenders are attempting to enter film finance. While they do not ask advance fees, YES they have the money but at present, the only service they offer is to give a filmmaker a lower interest rate on their Gap, bridge and on the soft money.
In order to get their money at lower interest rates however, the filmmaker must put together his entire film and after the project is ready to go these new lenders will want up to half the project for an interest rate 6% to 7% less than traditional rates, plus fees. They obviously want to make the same money they made "flipping" houses.
After you have completed all the work, they provide a service (which depending on your circumstances might be unnecessary) and it is difficult to determine the "real" cost of their money until you are ready to accept their money. It's like going to a "closing" and you just might waste months and months in negotiations, discussions, gathering and presenting information just to find out the deal is not what you thought it would be. Exercise extreme due diligence in all such cases and do not put a lot of your valuable time into any such deals.
After many years in the film production business and having exercised due diligence on many companies who claimed to provide funding for up front fees, to date no one seems to have found any that are legit
with a strong track record and yet they ask the filmmakers to have a strong track record and in many acses to "escrow 10, 20 and up to 50 percent of the money to make their film so they might borrow against it. A number of filmmakers wrote to tell me that ALL the filmmakers they know with
strong track records already have financing lined up for their next films. And so, these "financiers" are left to work with film projects that have "lesser track records" which is exactly what they have.
To cash in on the growing number of filmmakers who seek funds, many "film funding" companies were and still are being founded by individuals with a history of legal troubles. Before you ever consider working with a financier,
you should ask to speak with a film producer that has raised funds through this financier for a theatrically released film. And be careful working with agents, based on experience, some reputable "film financing agents" may unwittingly be promoting third parties that could be less than reputable.
There are always certain costs in doing any type of business, and chief among those are the costs of performing due diligence. These expenses should be recoupable at the closing table, not as an advance payment.
Any film financiers who are firm on their position of having prospective clients fund their cost of doing business in advance, are suspect and probably won't have much success attracting intelligent clients.
©2008, Stanley Lozowski. All Rights Reserved.
Labels: executive producer, film financing, film funding, venture capital
