WHY THERE ISN’T ANY FILM FUNDING IN UTAH

I’ve spent a lot of time over the last few months with the tech community in Utah. There’s a huge buzz going on in “Silicon Slopes”, and in an attempt to see what all the “buzz” was about, I started to attend meetups and other networking events put on by that community.

Come to find out, there are a lot of things happening that are truly buzz worthy. In Utah there are many companies that are valued over $500 Million, and in Provo alone there are three $1 Billion companies on a single STREET.

That’s one of the things that drew me to this community — there’s a crap ton of money circulating around. Check out these headlines from the last 3 weeks alone:

“Kickstart Seed Fund Announces Close of New $39M Fund”

“Pluralsight Acquires Code School”

“Cranium Cafe Raises $250,000″

“Marketware Raises $1.4 Million From EPIC Ventures and Peak Ventures”

GoodNESS that’s a lot of money, and that’s just a small slice of the whole picture.

Not only that, but there are now over 50 Venture Capital firms and seed funds in the state of Utah, focusing on everything from early stage investments, or “seed” money, all the way to series A rounds (or “crap tons” of money).

So, literally hundreds of millions of dollars being invested in tech companies and startups in the state of Utah. You could pitch a different firm every day for a month to find capital for your startup without knocking on the same door twice.

As a producer, I find myself asking the question “where are the film investors?” They have to exist somewhere, right?

Maybe…

Here’s what I’ve seen happen in the last 10 years or so in Utah:

Bloated Budgets

Between 2000 and 2014 there were over 20 movies produced in the state of Utah, meaning the film was shot here, local actors, by independent Utah production companies and filmmakers.

From my count, only a handful were actually profitable in the short term (theatrical, foreign, and other early windows/sales). Every time someone produces a movie for $1 million that only makes $500k in theatrical, it makes me cringe. It shows that they didn’t spend enough time figuring out what the market actually will pay them for that film.

With every “flop”, we lose another investor, or group of investors, which hurts future productions in the state.

Too Much Risk For Equity Investors

With few exceptions, most productions in the state are financed 100% with equity money. That’s a HUGE risk being placed on the investor. In order for them to make any return at all, the movie has to make 2 to 3 times it’s budget. Investors are fiscally conservative people — they’re generally not interested in risking a dollar to hopefully make a dollar. They’re looking for asymmetric risk/reward, like risking a dollar to make three, or five, or even ten.

After hearing the same pitch a couple of times, “we need $1 million to make a movie, and you’re taking all the risk”, I’d get turned off of film investing as well.

No Market Strategy

Rarely have I heard of another film that has a plan for making their money back. Only recently have we seen some box office successes in The Saratov Approach and a few other films that are using foreign sales and other windows to help assure a return on the investment.

However, previously, the one break out hit “from Utah”, Napoleon Dynamite, was actually shot in IDAHO. We just aren’t thinking about filmmaking as broadly as we should be. We have to be thinking not only about producing movies for the right budget, but need to have a plan on how to make our investor’s money back.

There’s still one other problem…

We Aren’t Making Good Movies

A quick look on IMDB and the average rating of all the films produced in the state (again, by Utah based production companies) is a whopping 4.7/10 (!!!).

Holy crap.

There isn’t a single rating above 7.4 (The Best Two Years), with 1/3 of them rated below a 4. It’s just pitiful.

We aren’t making good movies. The reality is, before everything else — the budget, the strategy, the package — we have to have a good story.

Look at some of the most successful independent filmmakers of the last 15 years.

Quentin Tarantino: 8.15

Wes Anderson: 7.6

Edgar Wright: 7.36

(Check out the rest of the list here: http://www.imdb.com/list/ls000094059/)

They all have one thing in common outside of their high average ratings: a focus on story.

If we want more investors, we have to fix all of those problems. We need better stories, we need more conservative budgets, and eliminate the risk and provide asymmetric risk/reward to our potential investors.

Only after we start consistently producing better movies that provide a return for our investors will we be able to get more investors into the community.

Yet, that’s the catch-22 that we currently are stuck in… how can we produce movies without money, when the money won’t come until we start making better movies?

Your guess is as good as mine, but I think it starts with better producers making relationships with investors who value the person more than the project. I guess we’ll see.