Bucks Lecturer Allen Stroud Explains How to Finance Your Project at Kickstarter

Kickstarter

Writer and film-maker Allen Stroud, author of Elite: Lave Revolution, and also head of Film and TV at Bucks explains how to get a Kickstarter project off the ground. The rules of raising finance for film projects is changing fast. If you have a good enough idea, there is no reason why you cannot crowd fund your project and get fans all across the globe to make your dreams come to life. Here is how it is done.

What do you need to succeed at Kickstarter?

You need rewards. This basically means free stuff to give investors. By way of example, you can offer free signed books, free drawings, a screen credit, eBooks - anything that you can give that will get investors excited.

How does it all work?

Remember that a Kickstarter campaign is not a linear curve. Campaigns tend to open well, and then run out of steam. Fortunately,  lots of stuff comes at the last minute. Campaigns often close well - but with a big (terrifying) dip in the middle.

You have to understand the Psychology of Kickstarter. There is a comments page for your project, but no-one can comment, unless they have first backed it - this incentivises investors to pay up if they want to voice their opinion. Also, investors don’t pay anything until the funding is closed. So, it doesn't feel real until the project has reached its goal (which it might not). Yet. Again, this encourages people to pledge - they might not have to pay anything. And, investors can adjust their pledge up or down until the funding is closed. If they start to lose confidence, or they don't like what they are seeing, they can withdraw their pledges. Nothing is fixed until the end, when payments are cleared through amazon and credit cards.


What if you reach your goal? Can you ask for more money?

Once you reach your additional funding target, you can ask for more. You can add “stretch goals’ to add extra stuff that you would like to have. A Kickstarter campaign can takes 30 days, or 60 days - it's up to you. Remember that this may well be “the most tortuous time of your life” - but can be very rewarding. And, if you don’t make it, nothing happens. The project just ends. “That is it”.


What are the secrets of success?

Once you launch your project, you need to the following:

• Talk about the project a lot - don’t be quiet. You must communicate with them. Be engaged with them
• Encourage a sense of community. This is your team, your fanbase
• Until it’s funded, it’s not over. You must keep producing new rewards, keep exciting your fans
• You must make videos. Lots of videos. Keep up the momentum 
• If you have a physical thing you are selling, you must make a prototype of it, so people can see it
• Be generous! You must not appear cheap, or let down your fans. You must avoid bad press at all costs - your pledges will start to disappear. 
• Be realistic, especially with stretch goals. Don’t offer rewards you cannot deliver.
• Get a bidding war going if you can - a first edition of your book, for example, will sell for a lot.
• See what others are doing. Copy stuff that works. 
• Hit the ground running – keep up the momentum! Update every day, update comments.

Other sites worth knowing about

www.kicktraq.com - gives you daily data on your project. It is a statistics site. Gives you a chart which shows your progress.
www.thunderclap.it  another useful site for Kickstarter projects.
Indiegogo.com This site is like Kickstarter, but offers "experienced ambassadors" to support you in your goals.
Patreon – Like Kickstarter, but with more of a focus on the arts.


Here at Bucks we think every good animator has a story to tell. We encourage all our students to come up with ideas, and make their own films. Kickstarter can be a great source of possible funding for your projects.

Who Invests in Independent Animated Feature Films?

Photo: Wikipedia

Who invests in independent feature films? And how does the aspiring film-maker find those investors? At the European film finance conference, Closing the Gap, Perrine Hamon of Media Deals, and Thierry Beaugard of Peaceful Fish explained what kind of investors are out there, and how to find them. Any animator who has a dream to make their own independent animated feature film needs to know just a little bit (and possibly more) about the nuts and bolts of movie finance.

The good news is, there are plenty of places that specialise in film finance. Wealthy individuals, government bodies, equity investors - the industry offers many choices. The bad news is, getting your project to them in the right shape to make it investable is a formidable challenge.

Thierry Beaugard of Peaceful Fish

Perrine Hammon explained what it is that his company, Media Deals, actually does. They are mainly interested in financing media startups, rather than making content for film & TV. Media Deals is "a network of investors in the media sector". They have "around forty Investors, and they are always finding more".


Types of Investors


What kind of investor is right for you? And what kind of deal terms are typical in the business? There are four principal types of investors in movies:

Not that kind of angel.

1. Business Angels

Business angels are individual investors, who invest in films "on a case by case basis". The sums involved range from "around €10k to €1m". It's generally their own cash they are putting in, and they generally like to be personally involved in the project. They often invest at the start of the project, helping with its development. Why do they invest? Because of their own personal interests - and also the film's commercial prospects. Usually, a business angel is a very wealthy individual "who really likes movies".

What kind of deal terms will a business angel want? 

The chances are they will want "at least a 50% uplift" for their investment. After all, film is risky. And if they are investing in the company making the film, they will want to take a percentage of the company.

Where are they to be found?

Business Angels tend to "congregate in networks". These include, for example, the European Business Angel Network , the European Venture Capital Association (EVCA), and other loose networks of like-minded individuals. Film-makers might also "try family and friends" for start-up assistance. Many angels are alumni of business schools, former bankers and businessmen. These are the kind of people who might "invest around €10,000 in a movie". They are not easy to find and you will need a credible business presentation to get in the door.

How do you pitch to business angels?

Once you have found them, you will have to "make presentations to groups of angels". A bit like Dragon's Den, but for movies.  The best advice to start with your home market first, pitching to local entrepreneurs and business networks. Especially good are business angels who have "never invested in films" - they have yet to be disappointed.

One problem that film-makers face is that most business angels tend to prefer investing in companies rather than individual projects. Usually they tend to prefer companies, as these can be sold at a profit. Projects are - generally - less profitable than investing in companies.

How Venture Capital Works. Image: Wikipedia

2. Venture Capital Funds

Venture Capital funds, or "VCs", tend to be applicable to bigger businesses rather than very small start-ups. They tend to have "big funds, with a big portfolio, and rather higher costs" than individual investors. Usually, they are "not interested in small projects". Rather, they tend to seek "high-risk high-reward projects, and tend to invest in companies". They usually invest after the development stage, in the "production stage" of the business plan.

How Do You Pitch to VCs?

For a successful pitch, you must have the following in place:

1. Financing Plan
2. Marketing & Distribution Plan
3. Revenue Projections
4. Corporate track record.

It goes without saying that at this point you need a credible producer on board who can help you prepare this kind of material.

Now close the deal. Photo: Wikipedia

What are the Typical Deal terms for a Venture Capital Fund?

VC investors expect to recoup their investment, plus a significant premium. Many will want an equity stake in the company. They will also likely want a revenue share of the IP [intellectual property] rights of the project.

One way to present your own project is to set up a Limited Liability Company (LLC) which holds the rights for the project you are developing. The VC investor will likely get a stake in this company, which is known as a Single Purpose Vehicle (SPV) because its sole purpose is to hold the rights for your film.

Another approach, suggested by Dutch producer Emjay Rechsteiner, is not to give shares in the SPV, but rather to make your investors a partner to the collection agreement [the agreement that governs the payment of revenues for he film]. Why? Because an SPV can go bust. By contrast, the collection agreement is transparent and clear, and that way "you don't have to keep the SPV for 20-30 years, paying for book-keeping and accounts and so on". This approach "gives investors security". The revenue from the IP rights "streams through the collection agency". What you will have in place is known as "The Collection Agency Management Agreement (CAMA)". The agreement is run by a neutral third party, the collection agency, who collects the revenues for the film. If you don't do this, "problems may arise with IP rights over time", whereas "a CAMA helps to keep the rights simple". Other investors however, said that they "would only lend to an SPV". Their lawyers "would not allow him to follow this collection agency model".

3. Public/Private Funds

The size of the sums invested by public/private funds tend to vary from €10,000 to several million. These investors tend to like "projects that satisfy a mix of public and private interests". Some development money is available (generally, development money is the hardest money to get). Usually, there is a "regional spend requirement". In other words, they want you to spend the money they give you in their own region or area. Quite likely they will want a share in the Intellectual Property (IP) as well.

Mediatech investors like companies that make stuff, not just creative content. Photo: Wikipedia

4. Mediatech financiers.

Mediatech financiers generally invest in companies, mostly hi-tech start-ups. These are usually a "marriage of content & technology". Typical deal terms include an equity stake in the company, board membership, and an exit strategy to sell the equity stake within a given time frame. These investors tend to want technology more than content - but the two can and do often go together.


What do equity investors want? And what are the typical deal terms that investors look for in film?
We'll be taking a close look at the nuts and bolts of film investment, and how to structure your deal, in a separate blog post.

---Alex

Timo Vuorensola, director of Iron Sky, explains how to crowd fund your feature film

Timo Vuorensola, director of Iron Sky, gave a lecture at Closing The Gap, a European conference on film financing, explaining how to crowd fund an independent feature film. Iron Sky was initially funded through online sources, and later on secured more conventional funding on the back of the crowd-sourced contributions. Timo explained how he pulled off such an ambitious and successful project by starting an online fan base to help make his film.

How did Timo Vuorensola develop Iron Sky?

In the late 1990s Timo Vuorensola was a student in Finland, studying film and visual effects, and he began work on StarWreck, a student fan project which was made over seven years for just $15,000. It was a "SciFi Star Trek satire"; the pitch was "Star Trek versus Babylon 5".

Timo Vuorensola. Photo:Wikipedia

The film was crowd sourced by fans and distributed free in 2005 on the web, just before YouTube became huge. Timo describes it as "the first film distributed free on the web". They sold a bunch of DVDs and made "a lot of money".

While they worked on Star Wreck, they began work on their next film, all about Nazis on the Moon, which became "Iron Sky". According to Timo, there is actually an online community that genuinely believes there are Nazis on the Moon. In the end, Timo managed to raise $1 million from the internet. Then, on the strength of this, they were able to raise a further $2m from other investors. Then, having raised this seed capital, they had enough money to get started making the film.

It was the trailer for Iron Sky was the key to their success - it went viral and soon reached 10 million hits on YouTube.




How did Iron Sky get underway?

They began making Iron Sky in 2006. It was filmed in Frankfurt in 2010, some was shot in Gold Coast Studios in Australia. In Australia, they got a very good tax rebate (40%!) and a skilled crew. Also, as Timo put it, it's a "very laid back place - highly recommended".

The film was sold to 70 countries and made "$8m worldwide".

What did the fans contribute?

Timo got the fans to write the lyrics of the Nazi songs, by running an online competition. They used the website www.wreckamovie.com, which helps to raise seed capital for films, and they built their own website at www.ironsky.net

In the end, crowd funding is about "people asking other people for help". But, "you can't ask crowds for big things. You must offer them stuff they can do in 45 minutes to an hour - you have to start easy". Iron Sky got started by creating a global map where fans could "demand to see Iron Sky!" All fans had to do was register and fill out a form.

What was the Risk involved in crowdsourcing?

The risk was quite simple - "failure". Timo was very much afraid of it. But his producer said: "we have no other way" to fund the film. In the end, "the community came together". Timo emphasised that "very few projects work this way though, you have to be very smart". So, how did they do it?

They started out with "a really cool teaser throwing out a hook". (see above at YouTube) The pitch was simple: "In 1945 Nazis went to the moon...in 2018 they are coming back".  Timo owns a small visual effects house, so he was able to get some nice visual effects done for the teaser.

Their website said - Buy War Bonds! You could buy a bond to help finance the film - just like in WW2. What fans got was "a piece of paper which costs €50 and says that you helped to pay for the film". What do the fans do with it? They "frame it and put it on the wall". The website had "lots of information, such as how much they needed to raise from various sources. In the end, €300,000 came from crowd funding.

What were the problems?

Timo explained that crowd investment "is very complicated", with "lots of legal problems". However, as they had no real alternative, their lawyer was "driven to make it work". There are certain restrictions - for example you can "only have ninety nine investors from each country". They needed "cash quickly for the film shoot", so they "got a bank to cash-flow the crowd investment. Norde Bank gave them €1m". The total budget was €7.5m. But, as Timo emphasised, "you need legal advice if you are asking people for money...there are rules & regulations".

Building your online community

To begin with, said Timo, "you must build your community. You must show them first that you know what you are doing. If you just go and ask for money - it simply does not work". But how to start? "You have to start talking with them; there must be participation. How can people help you? You must communicate with them, on Facebook, on Twitter through video blogging - you must contact your fans".

Does the process undermine your creativity?

No. Because film-making is a dictatorship, not a democracy. You have to run it from the top. You can communicate, and share - but they are not there to tell you what to do.

Swastika fortress on the moon

How do you get people excited about the project?

Timo explained that "your elevator pitch is vital" [an elevator pitch is a one line summary of the premise that underpins your film - Ed]. You have to "get people excited, since it is easy to get lost in the web. You have to keep it simple. You need good concept art. The video must be top quality. Your fans may do concept art for you for free". How does that work? "You can create tasks for concept art. People upload their art - other fans can comment on the designs.".

The film has a "long credit roll - the fans get a free screen credit! That alone is worth it for many people. Being in the Thanks section - this has huge value". What about the IP (Intellectual property)? Fans and contributors "have to sign agreement that the IP is owned by the film". The Creators of the movie "have all the rights". There is "an online form for people to fill out. You have to be blunt and honest". It's a case of "You do the work and we make the money", but then, "if you don't like it, then don't do it".

Timo urged that the online community "must be part of your daily routine". You must "Tweet, blog,  do a video...it takes at least 45 minutes a day".

Who runs the website?

Timo suggested that "you may need a community manager on your film". This would be "someone who really understands the web, and can use Wordpress, which utilises a simple code". You must "develop your Facebook, Twitter and blogging presence", since a traditional advertising agency "will be very expensive".

To see more about Iron Sky, visit www.ironsky.net. To buy your own copy of the film (The "Dictator's Cut"), visit this page at amazon. All the images shown here are copyright Iron Sky Productions.

---Alex

For more on the experience of studying at Bucks New University, come and visit us at one of our Open Days,  take a virtual tour of one of our animation studios, check out what our students think of our course, and see why we're ranked in the top 12 creative universities in the UK. Find out why we're giving free laptops to all our students, and why we give all our students free access to videos at Lynda.com. Also, see what financial assistance might be available to you. Learn which is better for animation, a PC or a Mac? Get hold of a copy of a map so you can find your way around campus, and learn about motion capture at Bucks. And find out about how our online video tutorials work.