Financing / Crowdfunding

Thank you Mr. George.

In this jurisdiction (Georgia, usa), I'm pretty sure our crew become employees the moment we hand them a call sheet and instruct them when and where to show up for work. At any rate, every picture I ever worked on used a payroll company reporting compensation on an employee's W-2, not a contractor's 1099.

Further research shows that SAG permits deferred compensation only under a New Media contract, but not its ULB or other contracts. It seems that IA explicitly prohibits the practice (though I have not found any reference in the LB agreement I quickly searched). Have not yet checked the teamsters, wga and dga contracts yet.

Without reading any statutes or regulations on esop's, a quick look at the question suggests our SPV LLC would have to be directly taxed to qualify. A google search suggests (I'm guessing mostly legal and banking fees) start-up fees of $15k - $100k to organize an esop trust and its board. Staffing a worker governed board from such a small short-lived temporary job, to manage assets with a short lived and likely small revenue stream seems prohibitive.

If we could organize this sort of mechanism, it seems it might take some sort of industry-wide cooperation and well-thought out regulatory reforms to make it possible.

I have not found it again, but I seem to recall watching an interview a year or three ago where Mark Duplass discussed early Texas based projects he did with his brother, where they crewed up by cutting the below-the-line folks in as net profit participants. Would really appreciate a link to that if anyone knows what I am discussing.

Hugh Esco In the UK, the majority of film and television crew—including directors—operate primarily as freelancers or independent contractors. They often work through limited companies or as sole traders. This model appears to be similarly prevalent in countries like Australia and New Zealand. This is why geographic mobility is vital based on what constraints you are working with.

Regarding employment classification in the U.S., it's not just a matter of state law (such as in Georgia). Nationally, under IRS rules, a person can be hired for just one hour or one day and still be classified as an "employee", apparently, if the level of control exercised by the employer meets the relevant legal thresholds.

That said, classification ultimately depends on the specific structure of the working relationship. According to IRS guidelines tailored to entertainment productions, roles are typically categorized as follows:

IRS Guidelines: Role-Based Classification

Category One: Roles involving high-level planning and creative control—such as writers, producers, and directors—are more likely to be considered independent contractors.

Category Two: Skilled technical or design positions—such as camera operators, sound technicians, scenic artists, production designers, lighting directors, gaffers, and key grips—can fall into either category, depending on factors like autonomy, supervision, and financial independence.

Category Three: Roles with limited creative input or control—such as dolly grips, electrics, general grips, and production assistants—are typically classified as employees.

Regarding your other points, I would never recommend making any credible legal decision based on a Google search. When it comes to compliance with securities laws, it's not just about speaking with any attorney—you need to consult a qualified securities attorney. Of course, you can choose to take your chances by relying on information from the internet, but that's effectively a legal gamble.

My research may often begin with a google search, but on vital questions, it would never end there. I've actually read a few volumes this past year on the SEC implications of raising equity financing for films. The industry and its economic realities has changed tremendously since I was setting lamps and running power in my much younger years. Back then I never had to figure out how the investors would recoup.

Hugh Esco It's not just in Film and TV. Literally every industry issues securities and the SEC often revises its position on certain transactions from time to time. But, as to whether what you described invokes US securities laws? Almost likely, unless some exemption is claimed. The standard is the "Howey Test"...and what you described seem to meet all four prongs.

If people wish to invest with crypto funds into your film, yes, accept their crypto. Treat it like any investment with agreements, etc.

Laurie Ashbourne The target film budget would provide clarity.

Some films like Saw (2004), made on a budget of $1.2 million, yet grossing $103 million worldwide, demonstrate remarkable success or Open Water (2003), produced with a budget of $500,000, and earning $54 million worldwide.

So what she is or was trying to do might depend on how much she is or was targeting.

Kenneth George all very true regardless of how funded. My point was that she needs to make sure she has the crypto wallet ability to accept funding. Most common wallets have limits of $25K. It can be done but the infrastructure of how to accept the crypto needs to be established.

Laurie Ashbourne I see. Keeping production funds in cash is probably the safest choice, since you have a fixed production budget and can’t afford to risk it. Holding them in cryptocurrency is more like investing in stocks — subject to daily or even minute-by-minute fluctuations — and carries the added risk of limited liquidity, depending on the specific crypto asset.

Marta Jorgensen Hi Marta, may I ask who told you that?

Laurie Ashbourne Thank you for sharing with the Lounge!

Wow Jack Binder. That's quite the jump.

Leonardo Ramirez 2 Absolutey! They're going to need product to generate that increase. Good news for filmmakers and the industry. Light at the end of the tunnel?

I’m game Jack Binder. From where I sit, people seem to be wanting something new.

Oh yeah

Jack Binder certainly interesting. What is scary is Netflix at $1100+ per share could be in some weird way undervalued. There are scenarios where that price explodes based on what moves it makes.

Fantastic new opportunity for @Stage32 Members! Randall Scott White

Thanks for sharing, Randall Scott White!

What a great benefit to investors - should we put it in the pitch deck?

Thanks for the reminder David Zannoni I’ll be knocking on your door when we are ready.

David Zannoni hi again, David. How does a CAM work with the company distributing the film? Or don’t they play a part in it? Is it just for the finance received from the distribution company? Or does it mean that they have to be more transparent in their accounting of the box office receipts for a film?

Hey Geoff, I'll jump in ahead of David to try to answer your questions. In short, all of the above. Think of the CAM as a receptacle for funds received from distribution. Distributors remit net revenue to the Collection Account, which disburses it to the stakeholders in accordance with legal agreements.

@debbieseagle - Yes. If your pitch deck contains financial/investment information, the CAM would be good to mention. For a creative deck, no.

Debbie Seagle You've encountered it seems the classic chicken and egg dilemma, as well as the realities of today's market. You nailed the basic requirements, although I would suggest a film finance business plan in addition to investor agreement. Likewise partnering with people with a track record helps. This way you can back up your top notch screenplay pitch with business-side documents for financing. Start with a budget and pitch deck, and of course log line.

Thank you Jack Binder I'm trying to find the time to take some Stage 32 courses as I'm being pushed forward by my crew. I'm thinking I'm the chicken chasing an egg right now.

Debbie Seagle My pleasure, yes, highly recommended, there is a wealth of information avalable. Likewise feel free to reach out via my website www.filmbudget.com

Debbie Seagle it sounds like you have some traction! If you find a director who likes it... that may open the door for an option agreement.

Michael Fitzer, MFA I've had four directors wanting the script, but none have directed a feature yet & I've learned that if we sign a (potential) A-list lead, investors want a more seasoned director. My script has won 3 festivals, Finalist in 2 & is nominated for 6 so far. That's encouraging.

Once I learn the pitch process, I'm in!

That’s amazing!

Any Jamaican screenwriters on here?

Amanda Toney This is actually quite interesting. It's almost like the current wave of Saudi investment in sports although that it on a completely different scale. If the funds are good, this might be an opportunity. Jamaican culture is something some americans are exposed to on some level.

Hate to burst any bubbles, however upon further research that dollar amount is actually Jamaican dollars. The total allocation amounts to about usd $4 million, with individual grants ranging from around usd $25,000 - $97,000. Good amount of funding, certainly for Jamaicans and independent filmmakers. Nothing to look down upon, just for clarification. Seemed like an enormous amount of money for a small country. If it sounds too good to be true, it most likely is.

Jack Binder you bring up a good point. I originally thought this was in U.S. dollars, but you might be right. If it is actually Jamaican dollars, that’s roughly equivalent to 4 million U.S. dollars. An individual grant of $100,000 can barely secure an option on a script, which makes their stated goal of competing in the global film market with a $4 million budget seem quite modest. Still, I suppose they view it as a necessary investment, especially since their economy is heavily reliant on tourism. It’s clear they are making a deliberate, conscious effort.