What Do I Need to Approach Potential Investors?


There are 3 main documents you will need when raising equity financing for your project:

·         Business Plan

·         Limited Liability Company/Agreement

·         Private Placement Memorandum (PPM or offering)

The trio complement each other and all become part of an integrated plan.  Together they address all the creative, legal and economic issues involved in making a film.  Let’s look at each one separately.


• Business Plan

- Outlines the details of the business & project

- Used as a marketing document to sell the project  from a marketing POV

- Contains info on:

§  film project

§  principal individuals involved

§  forward-looking statements, anticipated revenue

§  financial projections

§  risks associated w/making film

•   What it is NOT:

§  Solicitation or offer to sell securities

§  Not used to accept money in exchange for interests

§  Not to be construed as legal, business or tax advice

§  does not purport to be a sales document, or a prospectus or private placement memorandum, nor to be all-inclusive nor to necessarily contain all the information that a prospective investor may desire in determining the appropriateness of investing.


- Document needed – Raising money from a relatively small group of investors that are accredited investors

- Accredited Investors – A person who has a net worth of at least $1M (excluding their house) or have made $200,000 for the past two years.  A further definition can be found on the SEC website.

- a full disclosure document presented in a format that is more factual, pessimistic, realistic and down-to-earth. It must contain all the bad news risk and potential downfall or liability of the project. It must list all possible scenarios involving the project that could go wrong.

- Can only approach Investors you have a pre-existing personal or business relationship

- There are very complicated and detailed rules -and therefore should always consult with an SEC attorney.


• LLC entity

- Combine advantages of both corporations and partnerships:

- Partnership = taxed on a transparent basis -that is you can personally deduct the losses before paying any taxes due;

- w/out the restrictions of S corporations = not liable for the debts

- 99% of the time use LLC


Always consult with an attorney when finalizing a business plan, writing your PPM and opening your LLC to be sure you are complying with all state and federal  regulations.

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