Terms
Slate Financing
A safer method of financing a portfolio of studio projects (a slate) at once. Hedges the risk through diversification.
Single Picture Financing
The riskiest type of financing where one film project (typically an indie) is financed through a patchwork of various methods such as equity, distribution advances and tax credits.
Sundance Darlings
Films (or filmmakers) that were relatively unknown before Sundance Film Festival, but received critical acclaim and popularity after being shown there.
10-Year Ultimate
A nearly complete projection of the revenue a film will generate within the first 10 years of its life span.
Digital Security
Aka a security token. A blockchain-based representation of tangible assets, such as shares in a company or equity ownership in a film project.
Equity Financing
The filmmaker sells interests in either the film or film company in exchange for the funding. This serves to distribute the risk of the project because the investor only receives his money back if the film shows a return.
Anchor Investors
The first investor on a project, typically an entity with clout that determines how the rest of the project is financed.
Private Equity Firms
An investment company that utilizes its own funds or capital from wealthy investors in order to finance a project in exchange for an ownership interest in the film and the profits derived from the exploitation of the film.
Investment Portfolios
A set of financial assets (films) an investor holds ownership in, in expectation that it will either earn a return, grow in value over time, or do both.
Tax Credits
Cover a portion of income tax a production company would owe to the state.
Patient Capital
Long-term capital or capital provided by investors who are looking for returns 5-10 years or longer down the road.
Institutional Investors
An entity which pools money on behalf of others, such as commercial banks and hedge funds, in order to invest in a film.
International Sales Company
Foreign sales firms that help sell the distribution rights of the film to international territories.
Retail Investors
Individuals who act as independent, non-professional investors, purchasing securities in films for themselves rather than on behalf of an organization.
Debt Financing
When a production company borrows money from a third party, usually from a bank, for their project and needs to pay back with interest in a limited time.
Distribution Advance
Hedge Fund
A limited partnership of investors that employ high risk methods when investing in diverse film portfolios in hopes of getting a major return.
Hurdle Rate
The minimum rate of return from a film required by the investor(s). The higher the risk, the higher the hurdle rate.
Principal
The original amount of money invested that investors expect to see returned with interest.
Completion Bond
A form of insurance used mainly by independent film companies to help finance their films and guarantee the producer will complete and deliver the film. If the movie follows all the requirements set in the presentation to the bank, the production company will get money to help support the film. If the project does not follow the plan, they will not get the money or will need to re-propose the project to the financiers.