A conversation about the approach of film funding through private investors
Film financing with the help of private investors is far from common in this country. A director (who wishes to remain anonymous) spoke with me at the Berlinale 2019 about her unconventional approach.
In Germany, there is a very extensive funding system for feature films. However, you financed your debut film relatively unconventionally – with the help of private investors. How did you do it and why?
Filmmaker: Exactly, I founded my film production company back in 2013 and then – as advised – tried to secure financing for the first project through funding institutions. But since I didn’t have any solid reference projects or a film school education, access wasn’t easy. In hindsight, I understand that, especially seeing how many colleagues are submitting applications.
So after initially encountering closed doors, I started thinking about where else I could get my money from. With my background in the start-up scene, I met a wonderful investor at a business angel event who said, “Yes, let’s give it a try.” We then managed most of the financing with a network of entrepreneurs. In the end, film funding also came on board – after we managed to raise over 200,000 euros within six months. Overall, we ended up with a budget of 300,000 euros. It started relatively small, kept growing – and honestly, it was incredibly fun. This financing path has been described to me as very unusual.
“After first meeting closed doors, I thought about where else could I get my money. With my background from the start-up scene, I came to a very good investor in the context of a Business Angel event.”
Filmmaker
Unlike film funding, where you receive the money as a so-called “conditionally repayable loan,” your financing had a completely different approach. How did you manage to convince the investors of your project and how did they assess the risk?
Filmmaker: Since I didn’t have significant experience in the film industry, we developed a business model mainly with small and medium-sized entrepreneurs. We oriented ourselves towards German film productions that were also debut films to develop comparison scenarios. Very classic: what could the results look like in the best and worst cases. Of course, the goal was the best case; otherwise, no one would have gone down this path. Nevertheless, we built our entire financial structure on performance-based revenues.
With film funding, committees decide based on certain criteria whether the material fits and if everything is feasible. Your investors were actually financiers from outside the industry, right?
Filmmaker: I believe you can somewhat compare it to the start-up scene: behind every product, there is initially a personality with a vision that needs to convince. The only thing I could do was to show these people that from start to finish, I would never stop believing in this project. And that’s exactly how it was. I couldn’t have done it any other way. As I said, I didn’t have any references in the film sector and could only try to prove that I had a great team and could complement the competencies I didn’t bring myself with qualified personnel.
“The only thing I could do was to show these people that from start to finish, I would never stop believing in this project”
Filmmaker
On Working with Private Investors in Film Financing
And how about the creative influence on the project? Did the investors share ideas or try to influence in any way? Did they want to have a different cast, for example, because they thought the investment would be more likely to return?
Filmmaker: No, it was completely clear that they couldn’t make decisions about the script or any creative decisions. It was clear: the investors are on the financial side, and I am on the creative side. Of course, there was the desire from the beginning – also from my side – to bring in one or two known faces to increase the audience reach. We did have a few names involved, which was certainly beneficial and also a great experience throughout the work.
Looking back now, how did working with investors feel? Was it a positive experience that you would like to repeat? How was the practical work?
Filmmaker: I have to admit that it was incredibly pleasant and really a great experience. And I sometimes miss in the German film landscape that we approach things more economically, with more marketing know-how and product-oriented. I think it’s very important to have a creative vision.
Without it, a film will never happen and will have no audience. But I think it’s important to also think economically. Having such a partner by your side is especially helpful for smaller productions. In the film funding system, I think it’s crucial to consider economic aspects to connect internationally. No product is developed without a marketing budget and sales plan. Why isn’t there automatically attached marketing financing to production funding? I think it’s partly irresponsible towards the productions.
And how did the market react to your finished product, if we phrase it very economically?
Filmmaker: Everyone was totally satisfied with the end result, the investors as well as the participants. We had a cinema release in Germany through a German distributor. We also had an international sales agent who sold to various territories. Particularly exciting for me were the airline sales. And we had an incredibly great festival release in Germany and other countries in Europe and Asia.
I think it’s a classic format with longevity. I’m very pleased with how the film has developed from the idea to today’s release. Since it’s my debut film, it will always have a special meaning for me.
Based on your experience, what do you think: Would you a) choose this financing form again and b) do you feel that this financing form is only suitable for certain types of content and that your investors are generally more open to certain topics and less so to others?
Filmmaker: I think there are two aspects or two perspectives to look at: On one hand, there can be a personal connection an investor has to a topic, a sport, a specific instrument, an experience, or a country. Then it’s of course easier to find a common connection and convince them of a project. I would describe that more as classic patronage, perhaps with a larger budget. I think, with niche products or a genre film, it would be a strategy to look for investors with thematic interests. Moreover, there is venture capital for classics, for the “safe bet” (as I see it).
But I believe that we can only work with investors if we change these incredibly long development – or rather financing phases. I simply don’t believe an investor will join in now and see the film in theaters five years later. How should we even react in a timely manner? That works with classic material, with timeless topics whose relevance remains. But everything that moves with the times should find a way to be realized in the same manner. It would be great if we (again) had more venture capital for fresh, critical, and unusual content, formats, and ideas. It revitalizes the industry and protects against losing human capital to the “big” international productions.
“… it would be great if we (again) had more risk capital for fresh, even critical, unusual materials, formats, ideas. This also enlivens the industry and protects against losing human capital to the “big”, international productions.”
Filmmaker
Funding documentaries
How about documentary content, which would actually benefit greatly from being produced much more current. Because during the financing phase, topics can change, protagonists can drop out, or someone might simply lose interest. Do you think private investment also has potential here?
Filmmaker: Yes. I actually believe that with our consumption behavior, we won’t be able to maintain the longevity of film productions forever. And for documentary projects, it would be necessary to make maybe smaller budgets available but much more quickly. That’s the only thing that can help us. I have hardly any experience with documentary formats, but I would wish it for this production form. It can’t be that we watch a documentary film three years later when it might have lost its relevance.
And from what I’ve learned about the investors I’ve met so far, I would immediately say: there is great interest in documentary formats as a genre. However, hardly anyone is interested in investing in documentary formats because they feel it’s hard to recoup the investment. I’ve encountered many opinions that documentaries are not “products” and might not be long-lasting enough. Many want to invest in a safe product, preferably a classic. I believe we need to work on changing this perception. There is a lot happening in the area of distribution forms. Especially in streaming, documentaries hold a very high value.
After the experiences with your last feature film, can you give us a little preview of what you are currently working on and maybe make us curious about what it’s about and how you will finance it?
Filmmaker: Actually, the experiences with this large production, especially for distribution, have led me to now always produce in English for the first release. I’m totally in favor of creating a German dubbed version directly in post-production. Because: of course, it’s valuable to have a German-language version – alone for the preservation and cultivation of this beautiful language. I just don’t see a way to create enough incentives for investors in the market. And I think it’s wrong not to see it as an opportunity and to say: of course, I produce in English and thus reach a larger audience in the short to medium term.
Thank you for the nice interview!
I made you curious? And you want to learn more about film funding through private investors and get in touch? Please visit my website www.paulrieth.de or send me an email to hello@paulrieth.de. You can also find an overview of offers, services and references in the field of Audience Building, Crowdfunding and Marketing as well as video content production on the website of my agency GET YOUR CROWD.