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I also was contacted by "Love is the Drug" but chose to pass, in part because of the 5%/95% long term split. I fthe investors were asked to assume most of the risk but not really participating in the profit.
Investing in a movie is not for the "widows and orphans" fund. Many do not return much to their investors. Some return none. On the other hand, it's not out of the question for a $10 million movie to return $40 million at the box office. A 3:1 return over 2 years is worth examining.
* For those who might be contacted about investing in a movie, it would be reasonable and prudent to ask how their previous movies have performed for _investors_ (not just at the box office).
* I've seen better offers, for example where investors split 100% of the revenue until 200% of initial investment was returned. (For the LITD deal, 20% of revenue was offered until 100% of investment was returned.)
* If you don't take the deal, they won't call you back. Might not be a bad thing.
* Your capital is likely to be tied up for 2 years or more before you see any return, even on a "quick" turn around. Usually there are several rounds of investing available. You could purchase a few shares at $5,000 per share, then buy in more heavily closer to the filming date.
* The financial performance of the movie is rarely linked to the writer. Director and acting talent might be a better predictor of
performance, if anything can.
* Talent -- the closest thing to a known -- is almost certain to change over time. If the project looks like it will exceed expectations, better "names" are more willing to become associated with the project. If the project is slipping, name talent becomes more likely to disassociate themselves from the project.
* Check those auxiliary rights when evaluating a project for investment. A project that returns $10 million at the box office might return $40 million by the time you include DVD rentals and sales, and foreign rights. If those revenues aren't part of the deal to the investor, you lose your best chance at a return.
* There is an expectation that you will allow your money to "ride" -- that you will take your profits and reinvest them in future projects with that producer.
* Some genres are more reliable than others.
Best regards,
Alan