The Indie Film Investor: How to avoid the frauds, criminals and bullshitters

​The biggest hurdle to getting most indie films off the ground is getting the money to actually get them made. Most filmmakers are going the route of crowd funding and harassing their extended family and facebook friends (that they haven’t spoken to since middle school) to pitch in $50 towards their dream. Come on, we’ve all done it. But when you get past a certain budget threshold into the 7-figure range, only Zach Braff can pull it off on kickstarter.
 
So what’s there to do? You attach some noteworthy names, design a kick ass pitch deck, and you go out to high net worth individuals, hoping to seduce them into the ultra sexy/glam movie biz.
 
Then it happens! Somebody is interested! You have a potential investor!
 
What no one in this industry will admit is that 99% of the time, these private investors turn out to be TOTAL FUCKING FRAUDS. Most people would rather put a rose tinted filter over their “making of” stories, and not share the true horrors of vetting an investor.  
 
Here is how it actually goes down, sans facetune.
 
Phase 1: THE HONEYMOON
When start dating your investor, everything feels wonderful. He loves your script, thinks the cast is spot on, and has a huge passion for filmmaking. He will treat you to fancy dinners - you may even fly to meet him at his exotic villa in Mauritius. This is the honeymoon phase. At this point, you naively tell your colleagues and friends that you found your perfect ANGEL investor. You start verbally discussing the main points of the deal, everything feels fair, and its time to start putting an agreement together.
 
Phase 2: SHARK TANK
In a new relationship, nothing looks as good the morning after. The buzz has worn off and you’ve already slept together on the first date. Now all of a sudden, your Angel turns into a Shark.
 
The investor actually has some creative notes on the script, which he demands be completely re-written, and insists upon casting Rachel McAdams as the lead, because really, he’s always had a thing for her, and this is his chance to whisk her off her feet. So what if he’s never even read a script before, his notes are valid! And the lead character is a 50 year old transgender Latina? That’s what makeup and special effects are for!
 
Also, he wants 75% of the backend instead of the standard 50/50 split between creative and investors, and rather than taking advantage of the tax credit in Georgia/Lousiana/Canada, he suggests you shoot the entire film in a warehouse in Bulgaria that he always envisioned turning into a studio.
 
PHASE 3: EXCHANGING VOWS
Once you jump through all of the shark’s hoops, you finally get to a place where you both feel comfortable. You agree to stalk Rachel McAdams at the Soho House so he can send her a drink, and he agrees to come down to 51% and shoot in Georgia.
 
Your lawyer puts a Deal Memo together reflecting the negotiations, everyone signs, the investor steps on the glass, everyone yells Mazel Tov, and it’s time to fund the production account.
 
PHASE 4: FAILURE TO CONSUMATE
To consummate your marriage and go into pre-production, the investor has to fund the production account. 1% of the time, everything goes as planned, and the train leaves the station. But what no one ever talks about is when the funds don’t show up.
 
I have heard every excuse in the book from investors when the money doesn’t arrive. First they say the wire is on the way. When it doesn’t hit your account, they offer a personal check. When the check doesn’t clear after a 7 day hold, they offer a wire again. Then they get annoyed that you have been harassing them for money. Then they stop answering your calls/texts/emails.
 
PHASE 5: WHO THE FUCK DID I MARRY?
When things go sour in a relationship and you stop hearing from your ex-lover, it’s hard not to resort to social media stalking. You just want to see what they are up to. You are obsessed with tracking them down and finding out why they are too busy to talk to you. You Google them too, and you always find something weird.
 
People don’t change. If an investor has flaked on you, it’s pretty likely he’s done it before, and there will be a record of it. You might find old lawsuits or my personal favorite, mugshots. How could you be so stupid! If you want to sue him for fraud or breach of contract, you better get in line!
 
PHASE 6: ACCEPTANCE
You feel like an idiot. How could you have fallen for such a lying, scheming, criminal? It’s time to move on and find someone more suitable. But you can’t make the same mistake twice.
 
Here are a few simple steps to vet an investor:
 
Stalk
Always Google your investor. It doesn’t take much to find out if they actually own the fancy mansion they are staying in in Beverly Hills, or if that is in fact their personal yacht and not a charter. Use websites like Blockshopper or Spokeo, check property tax records, call the captain of the yacht if you have to. Your reputation is at stake! Pay attention to the details they give you in conversation and make notes so you can verify them. You would be shocked to see how often people lie.  

Background Checks
Find out where your investor does business and check both civil and criminal court records is those counties. Check under their personal names and their businesses. These searches can be done in most counties online at the county clerk’s website. Also, a simple Google search of their name and the word “mugshot” is surprisingly effective. This is also fun to do with names of family and friends.  

Proof of Funds
Ask to see proof of funds once you start negotiating the actual deal memo with your lawyers. If they have the cash, they shouldn’t be turned off by this simple request. Think of it as asking your tinder date if they’ve gotten tested – if they show resistance, there is most likely Valtrex in their medicine cabinet. People without secrets have nothing to hide.  
​
There is an old saying: fool me once, shame on you, fool me twice, shame on me. Vet your investors.

---

---