Case studies include Cannes hit It Follows; producer Rebecca Green talks financing challenges.

Nick Shumaker stated matter-of-factly in the American Producers panel at the American Pavilion in Cannes – “Any film between $3.5 million and $5 million is a dangerous region from an investment perspective.”

The acquisitions manager at Paris-based sales agency Memento Films referred to the difficulties investors face in trying to recoup costs with smaller overall production budgets.

“In the US, the majority of films at $4-5 million dollars have a long shot at making money back. This is because of the way the domestic market is working these days – it’s also the way the international numbers are coming in. You need a Nicolas Cage or a Matthew McConaughey,” he continued. 

New York-based David Kaplan of finance/ production company Animal Kingdom, agreed with Shumaker - but gave examples such as European co-productions and soft money structures that better allow these reduced budgets to work.

“Like Memento, we want to make films from a place of passion. But we have to be judicious of the budgets and to the marketplace. There are, however, some cases where $5 million is okay,” said Kaplan. 

Producer Rebecca Green, who worked with Kaplan in producing this year’s Cannes genre hit It Follows, discussed both the upside and downside of working on an independent film. Despite director David Robert Mitchell’s successful first film (The Myth of the American Sleepover) – she had difficulty in securing financing, with one investor pulling out at the last minute. 

“We were lucky David Kaplan and Animal Kingdom came on board in the end. He had reminded us that, though his first film debuted at SXSW and Cannes (in 2010) – it’s still difficult to get these films off the ground, particularly dramas.”

Mitchell’s relationship with Cannes meant that It Follows had a better chance than most to land in the Critics Week section, where his first film premiered. This also allowed the film to gain both international and US attention from buyers as it was the only American film in the section, with rights now sold to UK, France, Middle East, Hong Kong, former Yugoslavia and Turkey. 

Kaplan added that because it was a genre film, it was easier to secure investment without name cast.  New York-based sales company Visit Films also came on board without the assurance of recognisable talent, and helped to supply estimated figures that the producers could use to bring on board investors. 

“Once we had these sales figures, we were able to get an equity producer.  We were lucky to then get a post production house that was willing to defer the long share of their cost, in what we would then pay back in an equity capacity, thus lowering their cost. Our goal is to continue looking for key partners like this,” said Kaplan.   

Similar to yesterday’s UK Film Council panel that discussed packaging films at £10 million – Nick Shumaker reiterated financing and sales “are predicated by the director.” 

“It all comes down to the director for us. We go by our gut – they have to have a clear vision, and some body of work such as short films that premiered in other festivals, to substantiate our investments.  We might do full financing or part-financing, but once this is decided, cash flow can happen anywhere from two days to several months.” 

He cited last year’s Cannes entry Blue Ruin as an example, where it was one of the few smaller budgeted American films without a starry cast in the Director’s Fortnight section. “Because we premiered the film within an international festival, because of Jeremy Saulnier’s reputation as a director and because it had a strong story - within 72 hours after the festival, we had sold on all territories.”