Action! How your investment funds movies at every stage of filmmaking

In the late nineties, two aspiring filmmakers lugged rudimentary film equipment into the Maryland woods to create what would become one of the most successful independent films in history. 

The Blair Witch Project grossed nearly $250M worldwide after being shot for an initial budget of $60,000. The film became a franchise, followed by a string of sequels, novels, comic books, and video games.

Then there’s Paranormal Activity, which was created for $15,000 and grossed $194M worldwide, kicking off an entire genre of “found footage” horror flicks. Robert Rodriguez made his 1992 film, El Mariachi, for just $7,225. The breakout hit grossed $2.6M — one of the highest return on investment films in history. 

Indie filmmakers working outside the studio system have produced some of the most cherished films ever: Pulp Fiction, Slumdog Millionaire, Napoleon Dynamite, American Psycho and more.

Now imagine what it was like for investors in those films to see their underdog movie go on and become a cultural touchstone, not to mention the fact the investment returns may have been phenomenal.  

With Republic’s new groundbreaking film financing vertical, you now have the opportunity to invest throughout the filmmaking process – from development to production to distribution — with the opportunity for various revenue streams along the way.

Today I want to walk you through each stage and show you where the money goes and the payout structures typically available to investors. 

Investing in film really does give you the opportunity to back a project from script to screen with different risk profiles, different timing, and different payout opportunities at each stage. 

Like venture capital, film investing is not without risks. After all, this is art: there’s no guarantee that a development idea makes it to production, a film will be picked up for distribution, or resonates at the box office—meaning film investors can and do lose money. 

Investing at the Development stage

Investing in a film at the development stage is a lot like providing seed capital to a new startup. 

Your money goes toward putting together the “package” for a film - acquiring IP (intellectual property) such as rights to novels, comics, or video games, hiring a writer to develop the screenplay, bringing a director on board, establishing the film’s design, identifying film locations to match the creative vision, signing on actors for the project, and more. 

When a package does get picked up for production (even though not all do), the revenue streams start flowing.   

Pressman Film Example

The Pressman Film slate currently live on Republic offers a great example of how a development deal works.  

Development Film Financing Example

Development Payout 

When a film from the Pressman slate begins production (i.e. the cameras start rolling), investors recoup the portion of their investment tied to that film plus a 20% premium. For example: if $100k of the funding goes to the development of “Film 1”, Republic investors would receive $120k back within three months of the production start of “Film 1.”

Production Payout

After completion of filming, investors receive 15% of Pressman Film’s producer fee and 15% of any rights fee from every produced film in the slate.

The producer’s fee is generally 2.5%-5% of a total production budget. If the production budget of a film is $50M, Pressman’s production fee might be $2.5M, of which Republic investors would share $375k (15% of $2.5M).

Rights fees typically relate to use of existing intellectual property in a new project.  For instance, IP such as Wall Street or Badlands could be turned into a new film project or limited series. In those cases, a rights fee is typically 2.5% of a total production budget. So if a remake of a film is $50M, the rights fee might be $1.25M, of which Republic investors would receive $187,500 (15% of $1.25M).

Profits Payout

Following the release of the film, Pressman doesn’t take any money from the film’s net profits until you’re paid back in full for your entire investment plus 8% compounded interest.  This approach - where investors receive 100% of the net profits until a designated point - is also known as a preferred return.  

Once the preferred return target is hit, investors would receive 25% of all Pressman’s net profits for the life of the films in the slate across all channels.

Now that’s just one example of a Development stage deal. There are more to come soon on Republic including an action film slate from Robert Rodriguez (Spy Kids, Sin City, Alita: Battle Angel). 

Investing at the Production stage

Development stage investments are not the only way to get involved with film finance.  

After development is concluded, the team must secure further investment to roll the cameras and actually make the film.

Production funding could come from a studio, streaming service, or another raise from private individuals. 

When a film is greenlit for production, there’s a lot to do.  A film requires capital to hire cast and crew, book locations, secure permits, and ensure all logistics are in place to shoot the film. Once filming is over, there’s also money needed for post-production from editing to sound design to color correction to bring the film to its final form.

Investing at this stage still provides the opportunity for two revenue streams. 

The first is a premium on their principal, often 15-20%, paid from the gross receipts of the film after distribution fees and expenses.  

You’ll also often hear Production stage financing referred to as “equity investing”. Investors are entitled to a pro-rata portion of the net profits in perpetuity. Oftentimes, the split is 50/50 between the producers/talent and equity investors.

Our first Production stage project is on its way soon - an animated series from Cordell Broadus with Death Row Pictures. There’s also a unique opportunity on the way to finance sequels of well-established franchises from a major international film studio. 

Investing at the Distribution stage

Once the film is complete, another exciting phase begins: getting the film on as many screens as possible and telling the world about it.

Money invested at the distribution phase goes into marketing campaigns, print & advertising, film festival premieres, and distribution dealmaking.

Imagine traveling to Cannes or Sundance to attend your film’s red carpet premiere. Or getting a private screening before it hits the festival circuit. Or the rush you feel when learning that a major streaming company or studio has picked it up for distribution.

With most distribution deals, investors receive a 20% premium on investment after marketing costs and distribution fees are covered. Distribution payouts also come higher up in “the waterfall” in industry speak, above net profits, increasing the likelihood of a return. Distribution deals are also more of a “last money in, first money out” investment so payouts tend to happen on a shorter time frame, in as little as six months, since you’re investing near the release date of a film.   

Your investment puts the power back in the hands of filmmakers

By backing a project you believe in, you’re giving filmmakers new avenues to create without compromise and the opportunity to develop their creative vision into an unforgettable cultural experience for millions of people and you're right there alongside them in that journey.

You’re also helping filmmakers on the business side, enabling them to gain more leverage when they negotiate their distribution deals. Plus the engagement of a large audience of investors can even help drive the bottom line by generating buzz and ticket sales at distribution.   

We're actively talking with producers and directors across every phase of the filmmaking cycle. We have numerous exciting deals coming your way soon from notable talents like Robert Rodriguez, Cordell Broadus with Death Row Pictures, and a major international film studio.  

Stay tuned.