Get F*cking Educated: A (VERY) brief guide to not embarrassing yourself in Film Finance!

3 times in the past few months, the most recent being over the weekend, I’ve heard a familiar pitch: “A financier is willing to cover 80% of the film’s $7Figure budget IF I can find the remaining 20% first.”

It’s a phrase that sounds promising and makes a project seem like it’s on the edge of greenlight status. It ALSO gives the illusion of progress, structure, and professional backing…BUT…

This pitch is a fantasy!

It is cinema’s version of “the check is in the mail,” and it needs to be retired permanently.

I’m going to walk through a real example I received, explain the serious structural and financial problems with this kind of offer, and break down why it damages the trust necessary for sustainable independent film financing. 

I’ll also explore the key differences between equity and debt in film finance, a topic most people only pretend to understand. So, if you’re a filmmaker, financier, “producer”, or anyone else involved in development, this is for you. 

AND…If you’re someone who’s ever asked a stranger to “find the last $1.8M,” this is especially for you.

What the Pitch Looks Like in the Wild: This an actual excerpt from a real message I received (with names and identifying details changed for privacy…and honestly, for my own mental health):

“The budget is $9 million. I have a boutique film finance entity called Cactus Tuxedo Holdings Ltd., and they’re willing to finance 80% of the project if I can first secure the remaining 20% ($1.8 million). If you happen to know any investors who could front the $1.8 million, they could theoretically recoup that against a magical tropical rebate…”

“The 80% financier is a guy named Mitchell P. Flancher from Tornado Dolphin Media Group out of somewhere near Vancouver or a Vancouver-shaped suburb. He’s got 30 credits, mostly listed as Executive Producer / Disappearing Benefactor. I believe he’s legit, but he doesn’t want me sending around an LOI, because it might create the illusion that he’s committed to the project in any formal or legally actionable way. He says once I show interest in the other 20%, he’ll consider emerging from the mist.”

Let’s hit pause here, because this is the moment the pitch starts quietly bleeding out in the corner while pretending everything is fine.

The Problems with the “80% If You Find 20%” Model.

No Institutional or Professional Investor Commits 80% Contingent on 20%. If someone is truly willing to finance 80% of a $9M film, that’s $7.2M of capital they’re committing. No REAL financier pledges that kind of money conditionally, waiting on someone else to do the hard part. If they’re in, they’re in, subject to basic closing conditions, due diligence, and (sometimes) minimum equity thresholds. But they don’t hide behind the “you first” mentality.

What I am actually being pitched here is soft interest, not real financing. There’s a massive difference. An LOI that is withheld from scrutiny is as good as a ghost. If there is no binding agreement, no escrow, no paper, and no defined capital stack, then no part of the budget is actually financed. This is the indie film version of being told, “I’ll buy the car as soon as you put new tires on it.” Except I don’t know who the buyer is, or if they exist.

It’s a Leverage Illusion and a manipulative one!

The real goal of this pitch is usually to bait a private investor into feeling like they’re “joining a sure thing.” It’s a confidence trick and it’s effective, especially with inexperienced or emotionally invested backers. Unfortunately, this kind of psychological leverage depends on the illusion that someone else has “already said yes”, but no investor should commit capital based on the existence of another investor who refuses to be named, verified, or bound by contract.

If your supposed 80% backer won’t provide a verifiable term sheet, escrow proof of funds, or a structured waterfall agreement, then you have nothing and you’re using that nothing to raise real money from people who deserve better.

Confusing EQUITY and DEBT Is a massive red flag!

In the same pitch, the “producer” states: “We’d prefer equity, but a loan against the Magical Island Rebate™ would work alright too.”

That sentence tells me a lot and none of it is good. So I’ll define some basic terms:

Equity Financing means investors provide capital in exchange for ownership and a share of profits. This is high-risk, high-reward. Equity investors take the first hit if the film fails, and get paid last.

Debt Financing means money is loaned to the production, typically secured against an asset like a tax credit or presale. Lenders get repaid first, usually with interest, and have limited upside.

Blending the 2 without a clear understanding of how each functions is not sophisticated financing, it’s chaos! Saying “we’ll take equity or a loan, whatever works” is not flexibility. It’s a sign the “producer” does not understand their own capital stack, or the obligations that come with each type of money.

If you’re taking a loan against a rebate (like the Magical Island Rebate™), you need:

• Signed rebate approval from the local government

• A cash flow structure via a recognized lender (gap or bridge finance)

• Tax counsel familiar with international production compliance

• A repayment plan that accounts for overages and currency risk

If you’re offering equity, you better have: 

• A professional-grade waterfall model

• A clear path to recoupment and backend participation

• A defined exit strategy (e.g. MGs, pre-sales, library valuation)

Mixing these models casually is how lawsuits are born.

No Director, do distribution, and no talent offers. Just LOIs (for NONE of the leading roles!) 

The “producer” notes that the “right director” hasn’t been chosen yet because “they won’t attach until it’s financed.”

That’s not how it works! Directors often attach based on strong material and a credible path to production. Blaming the lack of a director on lack of financing is usually an excuse for not having enough industry credibility or creative clarity to attract one.

As for distribution...there is none! No sales estimates, no pre-sales, no territories locked, and no letters of intent from distributors. As for talent? A wish list with no signed attachments, and a claim that ‘Tara Reid is interested’ (LOL). That does not constitute package value, let alone sales leverage.

Tax Incentives are not cash in the bank!

The pitch leans heavily on the Magical Island Rebate™ and the Location Chosen 25% tax credit…BUT rebates are NOT guaranteed until the proper local agreements are signed, cultural approvals granted, and production actually occurs under strict compliance. Even then, rebates are not immediate. They must be cash flowed, and often take months or even years to be fully paid out. Using them as a lure to repay investors “right away” is misleading at best and dangerously false at worst.

So what should you do instead?

Secure your own capital or paper the deal properly. If someone is offering 80% financing, they should be willing to sign a term sheet, provide proof of funds in escrow, and outline clear conditions precedent.

Build real packaging before asking for money OR hire someone to help you do that. THEN, attach a director, lock in talent with true commercial value, get a sales agent or distributor to weigh in, and secure a completion bond. These are the signs of a project that is ready.

Learn the financial language you’re using. Don’t pitch investors unless you understand the difference between equity, debt, gap, bridge, pre-sales, MGs, rebates, and how waterfalls work. Confusion in this area destroys credibility instantly. 

Be transparent that if your project is early stage and you’re still building, just say that! Investors are far more forgiving of honesty than they are of smoke and mirrors.

My Final Thoughts:

The “80% if you bring 20%” model is not real financing. It’s a placeholder fantasy that wastes everyone’s time, especially the person pitching it. In a time when film financing is already fragile and trust is paramount, I can’t afford to keep operating on myths.

If you’re serious about building a real project, build it on paper first with hard numbers, real partners, and an honest assessment of where you stand. Anything else is fiction. And fiction belongs on screen, not in your budget deck.

Want help structuring your project like a grownup? Reach out. Just leave the soft-circle fairy dust at home.