The New “Soft” Money in Film-Financing Ecosystem

Zach Braff's "I Wish I Was Here" campaign trajectory Photo Source: Slated

Zach Braff’s “Wish I Was Here” campaign trajectory
Photo Source: Slated

They may not have realized this but more than forty-six thousand individuals – many of them ordinary Americans with no prior film industry knowledge – had a direct bearing on what has been happening this past week thousands of miles away at the Cannes Film Festival. Not so much on the rain-sodden red carpet action, as on the business dealings that went on in the makeshift offices of the French film sales company Wild Bunch just a short distance away from that nightly fusillade of flashbulbs. For it is here that Zach Braff’s “Wish I Was Here,” a project only made viable by the $3.1 million that this multitude of individuals have pledged towards his total production costs, was being pitched to territorial distributors from around the world.

Without that Kickstarter-enabled contribution, Braff’s long-gestating project would have remained stunted by the same market forces that have conspired to prevent him from directing a follow-up to his 2004 indie darling “Garden State” for close to a decade. “I have almost no foreign value,” he explained recently to the L.A. radio station KCRW. “I had done a TV show for ten years that doesn’t count. ‘Garden State did well overseas. But not numbers that are going to show up on their algorithm.”

Zach & Adam Braff co-wrote the screen play during the summer of 2012 Photo Source: Kickstarter - Wish I Was Here

Zach & Adam Braff co-wrote the screen play summer of 2012
Photo Source: Kickstarter – Wish I Was Here

But throw in $3.1 million of non-recoupable crowd donations and the business calculus becomes so much more attractive. What would have been a reported $5.5 million package requiring quantifiable box office stars to make the numbers work, is now transformed into one costing less than half that amount and with a cast of characters played by actors Kate Hudson, Anna Kendrick, Josh Gad and Mandy Patinkin that could be chosen on creative grounds, rather than their overseas economic values. A ten-year lost cause has, in the space of just 31 crowdfunding days, flowered into one of the hotter projects pitched on the Croisette – a feat made all the more astonishing when you consider there were a total of 3,340 new projects unveiled for the first time at this year’s Cannes film market.

Welcome to the indie world’s new arithmetic, a film financing revolution for which Braff has become the inadvertent poster-child through his committed embrace of crowdfunding. In the face of industry skepticism and media cynicism, the actor-writer-director has doggedly kept the faith and in so doing opened the doors to not only a new source of seed money but to better equity deals from bona fide film investors. Independent cinema is becoming a rational business proposition again. Here’s how…

The old film math hinged on combining three broad swathes of financing:debt, usually in the form of loans against bankable foreign pre-sales; a tranche of private equity; and whatever soft money can be extracted in the form of tax credits, government subsidies, service discounts, box office rebates and co-production programs.

Each of these three pillars has its challenges. Banks have tightened their lending criteria and foreign distributors are more conservative in what they are prepared to pre-buy. Soft money incentives are being held up to political scrutiny in this age of fiscal austerity. And private equity is being asked to bridge the budget gap on films after most of the rights have already been sold off – meaning less and less upside opportunity for those profit participants.

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