It’s no secret that the golden age for documentary films is upon us. Companies like Netflix and Hulu are pouring big money into production and acquisition of both one-offs and series. At the 2017 Sundance Film Festival, big dollars were shelled out for documentaries like Step (sold to Fox Searchlight for a reported $4 million) and Icarus (sold to Netflix for a reported $5 million), according to IndieWire.
A study commissioned by the British Film Institute also found that documentary production in the United Kingdom has grown steadily in the last twenty years, from just four films in 2001 to a record eighty-six in 2012. And, at the Cannes Film Market, documentaries now account for 16 percent of the films represented compared with just 8 percent a decade ago.
But as anyone who has raised money for an independent film can tell you, financing is often the biggest challenge. This is especially true for first-time documentary filmmakers. Without a track record, money can remain elusive. Grants are competitive and often require a broadcast deal, creating a chicken-or-egg scenario. How can documentarians receive grants without broadcast deals, and how can a filmmaker net a broadcast agreement without a grant to fund the documentary?
Many documentary filmmakers are turning to private equity investment to bridge this financing gap. A long-time staple in the narrative filmmaking community, equity investments allow documentary filmmakers to raise funds without lengthy grant applications.
The Getting Real conference hosted by the International Documentary Association held a panel discussion on equity investing in documentary films last fall that spoke to this very issue. Panel participants included Justine Nagan, executive director, American Documentary, Inc.; Brenda Robinson, creative investor, Sundance Institute Catalyst Forum; and Josh Penn, documentary and narrative producer for Beasts of the Southern Wild and Contemporary Color. It was a frank conversation on the promise and pitfalls of using equity investment to fund nonfiction films.
What is an equity investment even?
An equity investment in a film is pretty straightforward: The investor, which could be an individual, group, or company, purchases a stake in either the film or the LLC producing it. Like any investor, they hope to receive a return on this investment.
The first step: Finding the right investor
But what might that ROI look like? In documentary filmmaking, unlike narrative filmmaking, the investor may also be motivated to make his or her investment to encourage dialogue on a particular social issue. Many of the investors want to work with documentary filmmakers because they think, “‘This makes me happy,’” according to Robinson. “‘This story or issue matters to me.’”
Ideally, documentary filmmakers should seek out investors who share their passion for the film’s topic and believe that their participation and support for the project will fulfill them more than just financially.
“What strings are you comfortable with? Going in eyes wide open is so important,” she said.
Investors who are only interested in a bottom-line approach may not make good long-term partners. “I've been in the room where these beautiful films are being talked about as commodities,” said Nagan. Selecting partners carefully and cultivating clear communication is important because, ultimately, all money comes with strings attached. “What strings are you comfortable with? Going in eyes wide open is so important,” she said.
Cultivating relationships
Honesty between all stakeholders is critical to finding the right investor. Sustaining that relationship requires a similar approach, according to experts. Cultivating relationships is an essential step to securing an investment, but the most successful filmmakers are cultivating relationships all the time, regardless of the step in the filmmaking process.
The most important thing to do while nurturing relationships with equity investors is to “be your authentic self,” said Penn. Filmmakers get involved in projects and dedicate years of their lives to their completion because they’re head over heels in love with the film. “If you’re able to actively express that passion in a conversation, that's the most contagious thing,” he continued.
Finding investors is about more that just a budget’s bottom line. When it comes to documentary films, equity investors often want to feel like their input matters. Managing that relationship requires regular check-ins. It doesn’t hurt to seek advice. Once an investor has money on the line, they’re often willing to leverage other capabilities and networks. “Don't just stop at the money,” said Robinson. “Assess them as much as they're assessing you to figure out, ‘How much can I partner with them and how many different ways?’”
Beyond looking for partners who share in their creative vision, documentary filmmakers should also think about the longevity of their career. In some instances, filmmakers may value “soft” financial investments — money that can’t be recovered — because they give the filmmaker more creative flexibility, often at a key moment in the life of a film. Robinson encouraged filmmakers to consider rewarding these investors with a more substantial credit in the film , such as executive producer, because the money often goes further at critical moments and without strings attached. She recommended that filmmakers think about how an investor might help a director “not only get through this first film but have an actual career.”
Most importantly, filmmakers must manage expectations. “I work on a lot of films that are not going to make a lot of money,” said Penn, “and I try to be upfront with people.”
When to ask
Filmmakers should come to the table prepared. Investors want to see budgets, lookbooks, and, ideally, a reel. They want to know why their funding is essential and what the timeline for completion might be. This is especially true in the documentary community, said Penn, where films can take years to complete, and the narrative often isn’t clear: “You get a lot of people saying, ‘This sounds great. Why don't you come back to me when you're a bit further along?’” The more prepared a filmmaker is to answer these question, the more likely they’ll be able to secure the investment.
Protecting your piece of the pie
“You see equity investors come along, and they're looking at it from a business perspective,” said Robinson. “‘I am taking a risk’ — that's their perspective.”
But it’s not uncommon for documentary filmmakers to spend five or six years on a very low-budget project, only to have an equity investor swoop in at the end and offer meager help under unfavorable terms. This can be a very dangerous time to take an investment, according to Penn: “In that moment, you're very vulnerable. You've invested so many years of time. You need to get the thing done.”
When approached with these kind of investment deals, Penn encouraged filmmakers to put the breaks on. Try and brainstorm other possibilities for finishing your film. In some cases, a no-interest loan may prove to be a better solution in the long run. If you decide you have no choice but to take the money, make sure you negotiate the terms of that investment carefully. Filmmakers should be particularly wary of deals that give investors final approval over final distribution, which may impact the film’s ability to be seen at all.
Keeping the faith
While documentaries used to be funded in large part by grants, there are a number of groups that now organize and facilitate individuals interested in financing films. Catalyst, part of the Sundance Institute, connects culturally engaged film investors and funders with highly anticipated film projects. Then there’s Impact Partners, which brings filmmakers and investors together to create mutually beneficial relationships based on equity investment. Women Moving Millions, a collective of philanthropic women, also has a film circle dedicated to educating their membership on the benefits of contributing to social issue documentaries about women and girls.
“Getting someone to actually write a check is, even if it's $10, it’s hard,” said Penn. “They'll do it, but it takes a lot, the closing.” The key, according to Robinson, is to be direct and ask the question: “This is my production timeline. This is when I need it. Are you interested?”
