Many options exist to raise money for a film project. Issuing a private placement memorandum (PPM) lets your film company sell shares to “passive investors” (those who invest but take no active role in the production) in order to raise the money needed. If other financing sources are difficult to come by, selling shares in the company may be the best means to pull together the needed capital.
Why Use a PPM?
If selling shares in your company, a PPM is the safest way to raise money. The PPM offers the best legal protection possible to reduce your risk of being successfully sued by investors in the case that the company goes under. The PPM discloses all of the risks (including the risks that you cannot find a distributor for the film and that it never achieves commercial success) associated with the project, making it difficult for investors to claim that they were not adequately warned.
Using a PPM also shows that you are working above the board and take your responsibility to your investors seriously. Experienced passive investors, who have put money into film projects before, will be much more likely to work with you because of this.
If you consider a private placement offering for your film, consult with a licensed entertainment securities lawyer to best structure the offering and to understand the federal and state guidelines you must operate within.
Other Sources of Financing
Government support, whether in the form of tax credits, loan support, or subsidies, can be a boon for filmmakers depending on their geographic location. The cost of filming may be further reduced by seeking service discounts or even bartering with vendors (for example, giving product placement in the film in exchange for needed equipment or supplies). Co-producing the film with another company can share the capital raising burden, perhaps reducing the need for external funding. Grants for small films may exist, especially if the goals are artistic rather than commercial success. Exhaust all of these potential options to reduce the cost of your film and the capital you must still raise.
- Related article: Private placement memorandum definition
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