Raising funds is an important element of the filmmaking process. And if you are thinking of becoming a film financier, there are some things that you need to know in order to succeed in the venture. There’s money to be made in film financing. You just need to know what to do, and the things that you need to avoid. Below are five lessons you need to know to become a successful film financier.

1. Understand the Elements of Film Production Finance and Distribution

As a film financier, you need to know all the elements of film production finance and distribution. You should know the legal components, and how the rights for the film are made, distributed and paid for. It involves an elaborate patchwork of banks, in-kind services, soft money tax credits, and other investors. Financing films always involve a lot of risks, but some of them can be avoided if you understand the ins and outs of the industry.

2. Have the Right Connections to the Industry

When you are thinking of financing a film, you should make sure you have the right connections to the industry at a high level. It is important that they are trustworthy, and filter out people who you think will not make good business partners. It is important to have good lawyers and consult people who are qualified to analyse the proposed deal. If you don’t have any experience in the film industry, then you should consider bringing people who can guide you through it.

3. Have a Limit to How Much Money You Are Investing

It is important to have a cap on your investment per project. Not only will it reduce your risks, you will be free of worries about going overboard with the amount of money spent on the film. While the success of the project is not a hundred percent, at least you don’t need to worry about losing a lot of money in the process. By keeping the budget low, the film can reach its break-even point faster. This will improve the rate of return on the investment.

4. Know When You are Going to be Paid

Film financiers are often the first to receive money from the net distribution revenues. Once all the production budget and overheads were paid off, the film is already at the break-even point. Then it will trigger the profit sharing arrangement between the investors and the producers. The writers, director, and stars are paid from the profit of the producer.

5. Be Vigilant All the Time

Film financiers must be vigilant all the time. The film industry is a dangerous one, especially those who they consider an outsider. But if you follow the two lessons above, you are more likely to find good deals with reputable people.

These are the five lessons film financiers should know. Investing is a risk, whether it is stocks or film financing. It is important that you do your due diligence first before finalising a film financing deal with a producer.