Internet Film Financing: Evaluating the Options

Let’s have a look at the three sites that aim to help filmmakers raise money for their projects online, all of which are at a pretty early stage of development.

My only criteria was that they’re open to any filmmaker (I didn’t include sites that are raising money for one specific project, like ASwarmofAngels.com). I’m not endorsing any of these companies, just reporting on what they’re up to. If any of you CinemaTech readers have comments, or experiences with any of the companies, please post below.

1. IndieGoGo

In its first few months of operation, IndieGoGo has helped two films raise $10,000 each; in neither case was the $10,000 the film’s complete budget, but rather a “first round” of funding. Financial contributors may be rewarded with invites to wrap parties, DVD copies of the film, film credits, or signed memorabilia. Creating a project profile for a film is free, but once the financial goal is reached, IndieGoGo takes a nine percent cut. Filmmakers can post any material they like – some, like a budget or script, may be password-protected in a private area for certain potential contributors. Non-profit enterprises can use IndieGoGo to solicit tax-deductible donations, too.

- Here’s an earlier CinemaTech post about IndieGogo. They were also mentioned in this Variety story I wrote in 2007, when they were still called Project Keiyaku.

2. ArtistShare

Used so far mostly by musicians, ArtistShare is allowing at least one filmmaker, Paul Devlin, to raise money on the site for his “science-adventure” doc ‘Blast.’ Donors can pre-purchase the DVD ($49.99) or, for $150,000 go out to dinner with the filmmaker and star of the movie, get a personal lecture from the star, and be listed as an Executive Producer. ArtistShare charges a set-up fee for all accounts, plus a monthly fee, in order to be able to raise funds through the site. Unclear how open they are to helping other film/video projects raise money. Rick Moranis has used ArtistShare, as have jazz guitarist Jim Hall, Phish co-founder Trey Anastasio, and Maria Schneider, who won a Grammy this year for “Best Instrumental Composition.”

- Here’s an earlier CinemaTech post about ‘Blast’ and ArtistShare.

3. IndieMaverick

IndieMaverick, based in the UK, is the only one of the three sites that hopes to offer investors in a film a positive financial return if the film does well. Filmmakers can raise as much as $1.5 million for a project, but if the budget is over $50,000, they need to meet with IndieMaverick employee in person “to ensure the filmmakers are not fraudulent and to assess if they can make the film for the budget they have requested,” according to the site. Filmmakers are responsible for their own distribution deals when they’re done, and they agree to split any profits with IndieMaverick investors, 30/70. (Filmmaker keeps 30 percent.) All investors also receive “limited-edition DVDs.” How does IndieMaverick make money? Through advertising on the Web site, interest on the funds invested, and uploading costs, they say. IndieMaverick also reserves the right to sell the completed film as an Internet download after the theatrical or DVD release has taken place. One feature, ‘Run With Me,’ has raised $232,000 on the site, and another, ‘Putnam County Law,’ has raised $32,000. But filmmakers are allowed to include previously-committed funds in their total.

- Here’s an earlier CinemaTech post about IndieMaverick

Two other sites are worth a look, for smaller projects: HaveMoneyWillVlog (geared to video bloggers trying to raise $2000 to $3000 for a special project….but site is currently on hiatus) and Fundable.

Update: FilmRiot, based in Canada, and IndieShares, in Seattle, are also trying to get some momentum with online film financing.

IndieGoGo: A Social Network for Filmmakers Raising Money (and Their Backers)

Almost a year ago, I wrote about IndieGoGo in Variety, as part of a new wave of efforts to use the Internet for film financing. (Back then, the site was still mostly a concept, and it was called Project Keiyaku.)

Now, the site has officially launched.

I do want to see someone succeed, and create a networking hub where filmmakers can raise money. But I think filmmakers and financiers are right to be skeptical... you can see some of the debate about the model on this earlier post about IndieMaverick, a UK-based financing site. (One thing that would make me more comfortable with IndieGoGo would be an actual address, and names listed on the site of who is behind it. I know the principals, and that they're based in Berkeley, Calif., but I'm not a filmmaker or financier coming to the site for the first time...) What will it take for someone to succeed? A well-known filmmaker successfully using one of the sites to raise money for a project.

From IndieGoGo's official press release:

“DIY has been long the mantra of independent filmmaking and financing. At IndieGoGo, we push that to the next level with DIWO, “Do It With Others” which more accurately reflects the active communal process required to launch film projects”, said Slava Rubin, IndieGoGo Founder and Chief of Strategy and Marketing. “Using the tools IndieGoGo offers, we aim to empower artists to realize their goals and bring more relevant films to the people. Online fundraising is accelerating, the cost of production is falling, social networking is approaching mainstream, and user-controlled media is the future. As these trends accelerate, IndieGoGo offers a new marketplace to turn ideas into film, and fans into insiders.”

...In its pre-launch phase, IndieGoGo sought developmental feedback from a wide range of filmmakers and industry leaders. FLOW: FOR LOVE OF WATER, directed by Irena Salina and produced by Steven Starr, was selected by IndieGoGo to be its first Showcase project and was subsequently selected to World Premiere in competition at the 2008 Sundance Film Festival. Other noted filmmakers planning to include projects on the site include Christopher Roberts (THE BELIEVER), Lance Weiler (THE LAST BROADCAST, HEAD TRAUMA), Michael Roiff (WAITRESS, AMERICAN SON), M dot Strange (WE ARE THE STRANGE), Michealene Cristini Risley (TAPESTRIES OF HOPE), Brett Gaylor (BASEMENT TAPES), Beth Murphy (BEYOND BELIEF), and Yung Chang (UP THE YANGTZE) which is also featured in the 2008 Sundance Film Festival.

...Slava Rubin will represent IndieGoGo on the GOING IT ALONE: DIGITAL DISTRIBUTION FOR INDIE FILMMAKERS panel at the Sundance Film Festival on Wednesday, January 23, 12:30 pm at the New Frontier on Main Microcinema.

One more Internet film financing site: IndieMaverick

I wrote last March about several attempts to help filmmakers raise money online, none of them very successful yet.

Just before the holidays, a press release went out announcing IndieMaverick.net, a new financing site based in the UK. Here's their explanation:

Filmmakers provide their script, budget, poster and links to any previous films etc up on the website. Investors search for projects they are interested in, read the scripts, watch the previous films. When they find one they like they invest for as little as $25USD. Once the filmmakers reach their desired budget their monies are released and they go into production on their film. All profits the film makes are split 70 percent (investors) and 30 percent (producers). Indiemaverick.net takes no profit from the sale of the film. Filmmakers have total creative control over their project and can sell it wherever and to whomever they want. Indiemaverick.net does reserve the right to offer the film for download from the site once the film has completed any cinema or DVD run. Every investor receives a limited edition DVD of the film.

The site is here. How will IndieMaverick make money, if not by taking a piece of the film's revenue? "Through advertisements on the site, uploading costs and through interest from investment." They're not very clear, though, about what the uploading costs are...

The biggest drawback with all of these sites is that it'll be hard to attract enough $25 and $50 investors to fund a $100,000 or $250,000 movie. But there are other problems, too -- how will the sites guarantee that a movie gets made, or audit the filmmaker's income afterward to ensure that investors are getting their fair share?

I think there is exactly one way for one of these Internet financing sites to take off: by roping in a project by an established director, or with an established star in its cast. That'd feel bankable enough to thousands of would-be film investors.