Frustrated With Investor: Ask Damocles

Frustrated on Film Set

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From Community Member: Franks, asked on March 17, 2023
Topic: Investor Management

Dear Damocles

About a year ago we came to an agreement with an investor and agreed that they would finance a new movie project. As the investors brought not just money, but also contacts with actors etc to the table, they seemed ideal.

However since then we have delay after delay. The investor wants control over certain aspects of the production, but does not seem to have the time to follow up. It is very frustrating as everything else is ready, but our schedule keeps changing.

Does anyone have suggestions on how we can speed up the process, without upsetting our investor?

Dear Franks

An investor that does not invest is no investor at all.

What you have experienced is, unfortunately, not uncommon in the Media & Entertainment industry.

Professional investors will insist on written agreements that document what each party promises to the other. In my experience, any investor that does not is either insincere or an amateur. There are many of both out there. This is particularly true within Media & Entertainment.


“your recourse without a signed agreement is to rely on good will and relationship management skills”


Your post begs me to ask if you have signed anything with your “investor”?

If not, then there is little you can do to enforce their performance unless you are willing to ask a court to confirm that any promises made amount to a contract as a matter of law. Otherwise, your recourse without a signed agreement is to rely on good will and relationship management skills.

If you do have a signed agreement, then you have a form of compliance manual that dictates what each party is obligated to do, when and in what sequence. It is up to each “Party” of that agreement to enforce the performance obligations of the others.

Again, relationship management skills go a long way in maintaining good will between Parties of an agreement, and ensuring performance. However, getting the details of any changes, including delays, documented in writing is important to maintaining your rights.

Once good will is lost then you have only the terms of the contract and the right to ask a court to enforce them.

The “film” industry is a particularly crowded marketplace with a distinct lack of balance in bargaining position. This is particularly true for independent film-makers.


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Many “investors” in independent film offer financial support in exchange for equity in the project, or services (such as distribution support) in exchange for distribution rights or a combination of the two. These relationships have well-established forms of agreement that dictate professional-levels of performance.

However, it is not uncommon for even well-established groups to avoid full commitment by keeping things “informal” with new film-makers. They may have many reasons to justify this, or no reason at all. This type of relationship is not uncommon and places the independent creative at a distinct disadvantage. Some may say, purposefully so. This is a predatory practice that serves only the interest of one side in the relationship.

Film production is a well-established industry with well-established professional standards and practices. Although it is easy to do so, no one need re-invent the wheel or fall prey to predators.

You can re-balance your bargaining position vis-à-vis professional investors, talent and distributors by including an experienced Producer on your management team and/or engaging the services of an experienced entertainment lawyer. Both of these colleagues will repel the insincere predators and ensure that your agreements are balanced, enforceable and facilitate what all film-makers want: to make films.

Respectfully,
Damocles

1 Comment

  1. Bravo, Damocles. We got nowhere with handshake deals. Always broke down into petty squabbles. We take finance investors only into our production subsidiary now, it then holds all equity in each film company (initially anyway). That way investors get a spread of projects and we decide where the money is best spent. Distribution is with written agreements, always. Sometimes that means giving away equity, but everything is in writing. After that, it’s all debt and much easier to do deals. Again, written agreements. That would not have happened without our lawyer setting things up right for us (after so many fails). Contracts, Contracts, Contracts.

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