What Rate of Return Should You Offer Your Indie Film Investors? (2024)

FAQs

What Rate of Return Should You Offer Your Indie Film Investors? ›

The standard rates of return are anywhere from 110% to 125%. This means, should your film make enough money to pay your investors back, they can expect 100% recoupment of their investment plus an interest of 10 to 25 percent (depending on your offer). Of course, you can go lower or higher.

The Investor's Share is typically defined as 50% of the total Net Proceeds. The other 50% of the Net Proceeds goes to the producer (the “Producer's Share”). Any talent and other non-investor third parties who have been promised a back-end share in the movie are paid their percentage out of the “Producer's Share.”

The median ROI is -13.12% for an independently financed movie. This is a clear signal of the historic underperformance of these types of films. In contrast, the median of the studio-financed movies is 27%.

Film industry investors are investing in the movie production; so, somewhat similarly, they receive their return when movie is sold for distribution.

The defining element of an indie film isn't its budget, but rather the lack of financial backing or support from a major studio. Most new filmmakers start with a budget of between $10,000 and $25,000, which comprises both above- and below-the-line costs, as well as postproduction and other costs.

The standard rates of return are anywhere from 110% to 125%. This means, should your film make enough money to pay your investors back, they can expect 100% recoupment of their investment plus an interest of 10 to 25 percent (depending on your offer). Of course, you can go lower or higher.

Although that percentage can vary depending on your income, savings, and debts. “Ideally, you'll invest somewhere around 15%–25% of your post-tax income,” says Mark Henry, founder and CEO at Alloy Wealth Management.

Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average. Some years will deliver lower returns -- perhaps even negative returns.

According to conventional wisdom, an annual ROI of approximately 7% or greater is considered a good ROI for an investment in stocks. This is also about the average annual return of the S&P 500, accounting for inflation.

Return on Investment (ROI)

This calculation works for any period, but there is a risk in evaluating long-term investment returns with ROI—an ROI of 80% sounds impressive for a five-year investment but less impressive for a 35-year investment.

What percentage do investors get back? ›

But what is a fair percentage for an investor? When it comes to angel investors, the general rule is to offer approximately 20-25% of your business earnings. If you're selling the business in its infancy, this is the amount that investors will expect in returns.

Independent films are often financed by investors who have a passion for the project. These individuals provide money to filmmakers in exchange for an equity stake in the film. In this way, they share ownership of the film with other producers and financiers, as well as any profits from its distribution.

Key Takeaways. Investing in a movies can be lucrative and glamorous, but it is also a sophisticated and highly risky undertaking. Before investing in any project, be sure to do your due diligence and research the project, the producers, the talent, and the potential audience appeal.

How likely is it for an indie film to become profitable? Statistically speaking, the picture is quite bleak – 97% of independent feature films fail to turn a profit. Most filmmakers assume they will be in the lucky 3%, not realizing that turning a real profit with a low/micro-budget film is practically unheard of.

The Lord of the Rings: The Return of the King is the highest-grossing independent film and the first independent film to gross over $1 billion mark, while The Lord of the Rings trilogy is the highest-grossing film franchise estimated with $2.9 billion, distributed by New Line Cinema, despite being owned by Warner Bros.

An ROI of 30% can be good, but it can depend on how long your ROI has been at 30% in previous years.

It is not worth your time to do any investment if it cannot bring you 12 to 15 percent per year. Investing properly is not a gamble. We should not lose money in the stock market on a long term basis. In fact, a near guaranteed return of 15% or higher is a realistic expectation.

What Is The 1% Rule In Real Estate? The 1% rule of real estate investing measures the price of the investment property against the gross income it will generate. For a potential investment to pass the 1% rule, its monthly rent must be equal to or no less than 1% of the purchase price.

Assuming that you have $100,00 in your retirement savings account, you should withdraw 7%, which is $7,000 every year. Suppose the market gets volatile in the future, and your portfolio value falls to $82,000; the $7,000 withdrawal limit will represent 8.5% of your present portfolio value.

What is a normal return to investors? ›

The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index. In some years, the market returns more than that, and in other years it returns less.

What is the 4% rule for retirement? The 4% rule states that you should be able to comfortably live off of 4% of your money in investments in your first year of retirement, then slightly increase or decrease that amount to account for inflation each subsequent year.

There is no set percentage. Some agencies might be satisfied with a 5-percent ROI, while others might be on the lookout for a higher number like 20 percent for it to be considered good ROI.

A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.

You've doubled your money, not bad going… An ROI of 200% means you've tripled your money!

High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards. For example, government bonds are generally more stable than corporate bonds based on past performance.

While the term good is subjective, many professionals consider a good ROI to be 10.5% or greater for investments in stocks. This number is the standard because it's the average return of the S&P 500 , an index that serves as a benchmark of the overall performance of the U.S. stock market.

For the example above, an investment of $300 for a return of $200 would be an ROI of -33%. The minus sign indicates that we made less than the initial investment. The second example, with an investment of $500 and a return of $2000 gives an ROI of 300%.

In marketing, 500% (aka 5:1 or 5x) is a solid ROI. 1,000% (10:1 or 10x) is considered stellar. A 200%, on the other hand, would be considered disappointing. When you invest in stocks, an annual ROI of 7% is considered the standard, and an ROI above 10% is considered good in real estate investing.

What is a good ROI annually? ›

A good return on investment is generally considered to be about 7% per year, based on the average historic return of the S&P 500 index, and adjusting for inflation. But of course what one investor considers a good return might not be ideal for someone else.

Once your business turns a profit, the silent partner receives 20% of the net profit. The profit is what's left after you subtract business expenses from your total sales revenue.

To make money in stocks, you must protect the money you have. Live to invest another day by following this simple rule: Always sell a stock it if falls 7%-8% below what you paid for it. No questions asked. This basic principle helps you cap your potential downside.

The 50-shareholder limit does not just apply to a company at the registration stage. On the contrary, a proprietary company must not exceed the 50-shareholder limit if it is to retain its status as a proprietary company and avoid a range of regulatory and legal consequences.

Get a Film Job

That might range anywhere from production-related jobs like cinematography, production sound, ADing, producing or production design, to post jobs like editing, sound mixing, or working in distribution, marketing or at film festivals.

Indie filmmakers can make money through a variety of distribution options, including: Film Festivals: Many indie film.

One option is to attend film festivals and networking events, where you can meet other filmmakers and industry professionals. You can also use online platforms like LinkedIn and AngelList to connect with investors who are interested in the film industry. Keep reading to learn more ways to find film investors.

Film production companies that spend at least $250,000 are eligible to receive up to 17% in tax credits. The base tax credit for production companies that meet the requirements the tax is equal to 9%.

Investing in independent film is not only a good way to help improve the arts and shift spare cash into something worthwhile, but you'll also get a buzz out of being a part of something really exciting.

How much does Netflix pay for an indie movie? ›

Netflix typically allocates between $100 and $250 million for a single movie. This amount can fluctuate based on the specific film and the desired streaming rights, but it serves as a reliable estimate for the average blockbuster. In some cases, the streaming service may spend even more.

Some of the most profitable movies of all time include films such as "Avatar,” which had a production budget of approximately $237 million and grossed over $2.9 billion at the box office, making it the highest-grossing movie of all time, and"Titanic” which had a production budget of $200 million and grossed over $2.2 ...

The Blair Witch Project would go on to earn an astounding $248 million and is widely regarded as the most profitable, widely seen low budget film of all time.

But 2009's Avatar still holds the top spot. These stats, of course, are skewed by rising ticket prices and increases in population. Adjusted for inflation, no movie can match the $8.2 billion haul that Gone with the Wind's $390 million box-office receipts since its 1939 release would be worth in today's dollars.

Marketing: The most important part of how to make a movie as well as an expensive magic potion that it requires is its marketing.

A low-budget movie is a movie that's (usually) financed through self-financing or small private funding. There's some conjecture as to what the low-budget movie range is (especially when accounting for inflation) – but most analysts agree anything below $5 million USD can be characterized as low-budget.

Typical points for cast and crew are 1-5% for the lead actors, 3% for the writer, 5-7% for the director, 5-10% for producers (producers who put the project together typically start out at 50%, and give away points to the actors, writer, director etc, usually ending up with 10-20 %).

What is a typical angel investor percentage? ›

What percentage do angel investors take? The percentage of ownership that angel investors typically take in a company can vary, but typically it is between 10-20%.

Most investors take a percentage of ownership in your company in exchange for providing capital. Angel investors typically want from 20 to 25 percent return on the money they invest in your company.

How much does an Independent Film Director make? As of May 14, 2023, the average annual pay for an Independent Film Director in the United States is $70,041 a year. Just in case you need a simple salary calculator, that works out to be approximately $33.67 an hour. This is the equivalent of $1,346/week or $5,836/month.

Tier 3 is the final budget level covered under IATSE's Low Budget Agreement. Independent films that qualify as Tier 3 include Under the Skin and If Beale Street Could Talk. The production costs of a Tier 3 film budget must be greater than 11 million dollars but less than 15 million dollars.

In the profit-sharing model, the distributor gets a percentage (anywhere from 10-50%, usually) of the movie's overall net profits (its “box office”). The model is chosen on what will benefit both the distribution company as well as the studio making the film. Many major studios have their own distribution companies.

On average, potential angel investors expects to see a return of about 27% or 2.5 to 3 times their initial investment within 5 to 7 years. This means that if an angel investor invests $100,000 into a company, they expect to see a return of $250,000 to $300,000 over the next 5 to 7 years.

The more money an angel investor gives your business, they more they'll expect a bigger return on investment (ROI). The ROI expectation varies between angels and the specific investing opportunity. It's not uncommon for an angel investor to expect a 30% return on their money.

Typically, the threshold to become a major investor is $100,000 check size in angel seed deals. Now, it can be higher, it can be 500K. It can be lower, it could be 50K. But $100,000 is typically the average we see most of the time.

If your company is early stage and has a valuation under $1M, don't ask for a $5M investment. The investor would be buying your company five times over, and he doesn't want it. If your valuation is around $1M, you can validly ask for $200K–$300K, and offer 20–30% of your company in exchange.

It is far more common for dividends to be paid quarterly or annually, but some stocks and other types of investments pay dividends monthly to their shareholders. Only about 50 public companies pay dividends monthly out of some 3,000 that pay dividends on a regular basis.