Finders Agreement a way to help raise money

Filmmaking is a collaborative process. This is true not only regarding production, but in some circumstances with development and raising the funds to green light a film.

Financing tends to be one of the most difficult parts of the process for most filmmakers. While there are crowd sourcing services like Kickstarter and Indiegogo to help offset some of the cost, there’s normally a need to raise extra money.

Thankfully, you have a few options beyond using your credit card or begging your family and friends to help.

You may want to consider utilizing someone who claims to be able to introduce you to potential investors. This person is known a Finder. If you choose to go this route, you must be careful to make sure you are not violating any Securities Exchange Commission (SEC) rules and regulations. The Finder is usually an individual or consultant who assists the producer to raise capital during the development stage of a film project. The Finder will make the introduction to a potential investor and if the introduction leads to an investment, then the Finder is paid a fee that is usually calculated based on a percentage of the total dollar amount invested.

[pullquote align=”right”]The Finder is usually an individual or consultant who assists the producer to raise capital during the development stage of a film project. [/pullquote]

Anyone can be a Finder as long as they don’t overstep any of the SEC laws. A Finder’s only role is to introduce the producers to the investor, if they negotiate the deal than they would be considered a broker. This would require the Finder to be licensed as such with the SEC and could require SEC registration for not only the finder/broker but also the film. Sometimes, the Finder may receive a producer credit such as associate producer. This may be done for a variety of reasons, one reason is that if the person negotiates the deal as a producer on the film they may not be in violation of the SEC laws.

Before any introductions are made, the Finder should sign two documents: A non-disclosure agreement (“NDA”) and a finders agreement (see link to below to for an example of Associate Producer / Finders Agreement). The NDA ensures that the producer or anyone else he works with may not disclose the source of financing without permission and may not go directly to the source of financing without disclosing it first to the finder. The Finders Agreement is generally slightly more complex. It will normally deal with finding money for the current project but may also include other projects that may be funded by the Finders introduction. The Finders should be careful to ensure the agreement is drafted to include the current film but also any other films discussed.

A Producers should expect to pay a finder’s fee between 2-10 percent of the money raised for a single film. For a slate of films or a film with a larger budget the fee may be as low as 1-2% of the money raised. Each agreement and terms should be negotiated on an individual basis between the producer and the Finder. In addition, the Finder may require a producer or other similar credit.

The following agreement is only an example, the particular needs of the producer and the specific circumstances of each project should require consultation with an attorney.

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CLICK HERE to download “Associate Producer / Finders Agreement”

Legal Disclaimer: The material discussed in this article is not intended as legal advice, if you require such legal consultation on a particular project or film, please contact an attorney.

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