ANGEL INVESTORS IN THE FILM INDUSTRY…What are angel investors…The expectations!

ANGEL INVESTORS IN THE FILM INDUSTRY…What are angel investors…The expectations!

Bruce Bisbey

Are you thinking about joining the growing ranks of angel investors’ movie in an attempt to make money from the film industry? If this is your first time investing in movies, you may feel a little overwhelmed about the whole process. Any investment can be daunting if you are doing it alone and are unfamiliar with the territory. Investing in film production, investment options, types of investments, financial investment can be intimidating.

Experienced investors will ideally have plenty of success and experience in the field of business, with a strong knowledge of financial matters, but they may not have the necessary knowledge of the film industry, which is where we come in. Whether you are a sole investor or investing on the behalf of an investment company, you need to begin by researching the reputation of the producer. You want to ensure they have a credible track record — that you can trust them to ensure that the film is a success.

Small investment opportunities, independent film funding, low risk investments, small business investment, investors, smart investments, invest, investment firm, investment banking.

There is certainly a lot to consider.

WHAT ARE ANGEL INVESTORS?

If you have ever tried to start your own business, then you know that one of the hardest aspects of entrepreneurship is finding the funding for your new business endeavor. So many people approach banks and lenders every day looking for money for their businesses that it can be quite difficult to find the funding you need. If you are having difficulty getting a bank to be willing to fund you the money, or you do not want to wait for all of the paperwork and approvals to go through, then you may benefit from seeking an angel investor.

Angel investors are a good source of funding for your business. What are they? They are generally individuals who are independently wealthy. In order to maintain their wealth, they invest some of it in businesses that are just starting. In return for their investment, these individuals become part owner or shareholder in the company they have invested in. They have some say in how the company is run, and earn off return on their investment off the equity of the company. The percentage of ownership of an angel investor is usually between fifteen and thirty percent, depending on the amount of risk associated with the business.

Most angel investors are retired businessmen or women who did quite well in their own business pursuits. Having their expertise on board with a new business plan is a good idea for most new business owners. These business angels provide much more than just money. They provide leadership and guidance for young, starry-eyed business owners. This level of expertise often proves to be priceless for the young entrepreneur.

Angel investors can also use stock in the new company as a way to fund growth. They are given stock in the company as part of the investment agreement. Then, when they receive dividends on that stock, instead of pocketing those dividends the investors forward them on to the new company or business, allowing the funds to be used to grow the company. This is allows them to become board members of the new company, sharing in its equity over the long run.

You can use the internet to find angel investors. Do not feel that you have to be limited to a geographical area when seeking the help of a business angle. If your investor feels that your business is a good investment, he or she will not mind traveling from time to time to help with the oversight of the business. Having the help of an angel investor can mean the difference between a successful business startup, and failure. So if you have the next big idea, consider enlisting the help of an angel investor to fund your initial expenses, and give you the advice and direction you need to succeed!

EXPECTATIONS OF AN ANGEL INVESTOR

If you are considering using an angel investor to help fund the initial expenses of your new business, you need to know what an angel investor expects to get out of the deal. After all, you cannot expect to use the investor's money for free, can you? There are certain aspects of the business deal that most investors expect to see happen, which lead to profit on their end.

Since angel investors are all individuals, they have differing views as to what to expect to receive out of the deal. However, most angel investors want to have a seat on the board of the new company. Also, many wish to have a role as a consultant for the company. This consulting capacity is actually quite valuable to the new entrepreneur, because they have access to the invaluable expertise of someone with years of experience in the business world.

No matter whom you have as your angel investor, you can expect to be asked to provide the angel with excellent communication about the progress of the business. Now, what excellent communication means is going to be different for each investor. Some will choose to have access to quarterly business reports, while others will want weekly or monthly reports, as well as profit projections.

All angels will want to own part of the business. This ownership is usually in the fifteen to thirty percent range. This ownership can be in the form of stocks, either common or preferred, as well as convertible debt.

Angels that are particularly impressed with a potential business investment often ask to be the first choice when more financing is needed. While they can refuse this financing, they want be the first option the owner turns to when seeking more money for expansion and growth projects. This can be problematic for some entrepreneurs, because they want to limit how much control any one investor has over their company. However, most business owners understand the reason behind this request, and are willing to comply. This needs to be carefully written into the proposal.

Finally, because they have invested money that they have spent their entire lives earning, angel investors may ask a potential business investment to ask their approval before taking certain actions, such as before seeking more financing, hiring management, or buying and selling stock. This request is designed to give the angel even more say in the business, protecting their investment and ensuring them a high rate of return.

If you are comfortable with these expectations and are in need of startup capital for your business, seeking the help of an angel investor is probably a good idea. Start networking and get your name out there in the investment world. You can have the money you need with the help of angel investors, if you play your cards right.

Whether you are a potential investor or looking for an investor. Here are a few strategies and tips to help you with your research in locating potential film investors, or that right project to invest in. 

1. State Film Commissioners. They don’t want to advertise this, but state and sometimes city film commissioners are aware of the equity investors in their region, particularly in those areas where there are tax incentives or rebates.  Why? Commissioners process all applications (from filmmakers seeking film incentives or rebates), which must list all the investors. Film commissioners are usually paid via taxes and must cater to the needs of resident filmmakers.  If you hark on the state or local pride and promise to film something in their region, you never know what introductions may be made.

2. Entertainment Lawyers. When investors and producers need to protect themselves legally, they call on their favorite entertainment lawyers.  Those who specialize in independent film are aware of dozens upon dozens of executive producers, investors or angels. Whether they will divulge them to you is another matter. But a good start is to get to know them, perhaps become a client and try to get invited to their private parties.  Also, a good entertainment lawyer can be a superb ally for the entirety of your creative career.

3. Startup Investors. There are tech and entrepreneurial meetups, conferences and gatherings in every major city in America.  Go to them. Why? Two reasons: It demands that practice you’re schmoozing and networking skills, which are absolutely essential to creative success.  Furthermore, startup investors lurk in the shadows (or corners). Tech and other startup businesses are extremely risky, just like films. It’s possible that these same investors could be persuaded to invest in your next startup, aka your film.

4. Restaurant/Bar/Nightclub Investors. Just like the startup financiers, investors in restaurants, bar or nightclubs are used to risky and collaborative investments.  They also like fun or glamorous investments. If you happen to know this type of investor, go for it. If you don’t, go to your favorite restaurant, bar or nightclub and meet them. Tell them how much more business and media coverage they can generate by being the locale for an important scene in your film or by hosting the premiere party.  Also helps to offer them or their spouse a small role.

5. Philanthropists. Every community has them.  They donate large sums to the local schools, parks, gardens, landmarks, museums, theaters, ballets and orchestras.  And sometimes, if you’re lucky–and they like you and your project, they may just invest in your next film.  Those philanthropists who live in your region (which is another serious bond/head start) and have a history of contributing to the arts are your best bet.

6. IMDB. As everyone knows, IMDB lists the casts and crews of films and television shows. This also makes it a great source for researching and locating investors. It’s not the subtlest method, but it can be a start: Find film titles similar to your upcoming film in both budget range and genre.  Then click on “full cast and crew” and locate the producers’ section. Those who have a “produced by” credit are generally film producers and not investors.  They are money raisers, but not investors themselves.  Those who have “executive producer” or “co-executive producer” titles (and no other position on the film) are more likely to be your target: independent film equity investors.

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Sources: Google, Wikipedia, Pinterest, IMDB, PMI, Jim Jermanok, Linked In, Indie Wire, The Movie Fund, Venture Worthy, Your Money, Financial Times, Screen Magazine, Marc Jacobson, KPMG, Variety, Film Maker Magazine, Research Gate, Think Adviser

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