Actor Zach Braff has joined the ranks of other actors like Melissa Joan Hart and James Franco in duping donators to fund their film attempts. Zach Braff succeeded in raising just over $3M for a film from donations from forty-six thousand people 46,000? How much does this equate to per donator…$68?
Wouldn’t 1-10 real investors be a better idea? That is the typical number for the majority of how film finance is syndicated today to mitigate risk. In as few as 12 film finance transactions between 2011-2012 some $5.5B was raised. And no more than 30% of this was equity. Donations are not equity no matter how much spin is put on it.
Remember when film producers had to convince real investors, lenders, and asset-based funders that their film was worth investing in and would result in profit? After all, that is what investors are in the business of… profit. But is indie-film’s poor track record of 85% that don’t even break even much less create at least 25% ROI required by real equity investors one of the reasons for the sudden popularity in PBS pledge donation websites? Ask any venture capitalist and they will tell you that “if your not in it for a profit then it’s just a hobby”. And you should risk your own money when it’s a hobby.
In 5/13, Slated reports that crowd donating is the new “soft” money. Yeah, right. Crowdfunding is not revolutionary for those who have been in the investment banking industry for decades and recognize it is just a parody of DPO’s or Direct Public Offerings. DPO’s are ideal for film producers as they do not require any marketing towards “accredited” investors. Best of all, your equipment suppliers, distributors, movie theaters, P&A providers, and end-use consumers can be a share holder in DPO’s. And DPO’s do provide actual 25% ROI profit.
Slated also reported that market forces had “conspired” to prevent Zach Braff’s film from being funded. Yeah, right. This assumes professional investors have some obligation to give away money to borrowers that fail to meet funding approval criteria. This isn’t true in the film industry any more than any other industry sector attempting to borrow money.
Slated also reports that Zach Braff’s film crowd donation campaign only took 31 days. What isn’t mentioned is that film’s like Veronica Mars; a pre-marketing phase occurred for weeks or months prior to the actual donation campaign. And how many people “volunteered” to implement both phases of such marketing campaigns?
Actress Melissa Joan Hart tried a donation campaign too but without a pre-marketing phase and here is the result;
Here is a video interview on why crowd funding is misleading to real investors;
Here are 7 reasons to avoid crowd funding;
Here is why crowdfunding will backfire and turn away VC’s;
Let’s admit that those who use crowd donations do so because they have no skin in game or likely already have been rejected for funding approval a few times.
Meanwhile, if your really interested in getting your film financed fast and actually have some >verifiable< skin in game see this;
This is 2 of several options disclosed as a courtesy on our blogfeed or by joining our Facebook group called “Wall Street film, TV, & entertainment finance”