S1 Ep2: Go Get That Equity

Season 1, Episode 2

Right. Let's talk about equity.

Of everything I have covered in this series so far, equity is the one that generates the most questions, the most anxiety, and frankly the most frustration. It is the financing tool that every independent filmmaker needs to understand and the one that most filmmakers approach completely wrong. So this is going to be a long one. Grab a coffee.

Before we get into it — if you haven't listened to or read Episode 1 yet, go back and do that first. By this point in the process you should have your groundbreaking script, your production schedule, your mock shooting schedule, your mock production budget, your preliminary finance plan, your cashflow, your recoupment schedule, your pitch deck, and your exec summary. I call this Dev Prep. I wouldn't even let anyone know the film exists until these documents exist. If you have all of that in place, you are ready for this conversation. If you don't, go and build them first.

What Is Equity?

In film financing, equity refers to capital invested into a film in exchange for an ownership stake and a share of profits. It is one of the core funding mechanisms alongside debt, grants, and tax incentives — but it behaves very differently from all of those.

Equity is risk capital. The investor participates in the upside if the film performs, but they are not guaranteed repayment. There is no interest rate, no fixed return date, no collateral. They are betting on the film.

What that means in practice is that equity sits at the bottom of the waterfall. Debt gets repaid first. Tax credits come back first. Presale minimum guarantees are recouped first. And then, once all of that is cleared, equity investors start seeing returns. This is why equity investors need to genuinely believe in a film's revenue potential — they are the last in the queue.

There is also something important that equity says about the film itself. More equity means more ambition. And that money needs to be handled with grace and decorum. Equity should always go towards production value — to establish a genuine value exchange between what the investment costs and what the film is worth. So ask yourself honestly: what makes my film worth something? Is it the director? The cast? The VFX? The stunts? The IP? Know the answer before you ask anyone for money.

The Types of Equity

Not all equity is the same. Here is a breakdown of every type you are likely to encounter.

Pure Equity

Capital invested in exchange for a pro-rata share of profits, with no special priority. Pure equity investors recoup alongside other investors, receive no premium or preferential treatment beyond an Executive Producer credit and perhaps premiere tickets and set visits, and are fully exposed to the downside. This is the highest risk form of equity for the investor.

Typical pure equity sources include family, friends, close associates, early stage indie investors, and passion-driven capital. People who believe in the project and in you, and are willing to accept the risk that comes with that.

Preferred Equity

Equity that receives preferential recoupment terms before standard equity participants. Preferred equity investors typically recoup first within the equity pool and often receive a premium — standard is anywhere from 2.5% to 20% depending on the provider. It is lower risk than pure equity but still carries significant risk relative to debt.

The reason preferred equity exists is to attract more serious investors who need a faster return profile. These are people who invest for a career — they need cash liquidity to maintain growth momentum. They do not want to be tied up in a film for years waiting for returns. They might typically look at tech startups wanting quick exits, crypto trends, or buy-and-break-up company deals. Film is usually an extension of their portfolio — something they can mention on the golf course while also expecting a return. Preferred equity can be capped, meaning once they have made their money back plus their uplift, they are out.

Participating Preferred Equity

Essentially both of the above combined. The investor gets their money back, plus their uplift, and then continues participating in the profit pool in perpetuity. This is my personal favourite structure to offer investors because it is far more attractive and reflects the genuine risk they are taking — which is, frankly, more than the filmmaker's risk, since we still get paid to make the film.

It is a double dip structure. If the film performs well, they perform well. And if the rapport is upheld, they will usually roll their returns back into your next film. That is how you build a long term investor relationship.

Equity with Corridor Participation

An interesting and effective structure, though harder to build because it influences other finance sources. Instead of full backend participation, the investor is tied to a specific revenue corridor. For example, if your investor is German, all net profits from Germany are exclusively theirs until they recoup, while still sitting in the traditional waterfall elsewhere. It significantly reduces their risk.

The critical caveat here is that you need to have your other investment partners' agreement before offering this. Equity with corridor participation should come near the end of your financing process — not the beginning — because you need to understand your relationships with other investors before restructuring anyone's position. Doing it prematurely sets a sour tone and can deflect other partners.

Slate Equity

An exciting proposition because the investor is putting money into more than one film. The ask is larger, but so is the opportunity — and in the UK specifically, slate equity opens up access to SEIS and EIS, which are genuinely powerful tools.

The idea is to set up a production company with the intention of longevity. Say you are launching a horror-focused company with a slate of three films. You ask for, let's say, £2 million in equity to kick-start the equity contribution to each film. Within that structure, the first £250,000 can qualify for SEIS — the Seed Enterprise Investment Scheme — which gives investors 50% of whatever they invest back against their income tax bill. So if an investor commits £100,000, they get £50,000 off their income tax. That is a remarkable incentive for high net worth individuals who pay significant income tax. After the £250,000 SEIS threshold, it converts to EIS — the Enterprise Investment Scheme — which offers 30% tax relief on the remainder.

Important notes on this. It only applies to income tax, not corporate tax, so it does not work for companies. And SEIS and EIS absolutely cannot be applied to a single film — it must be a company with ongoing activity. I have had significant success with this structure and I have also been denied because people tried to apply it to a single production, which is not permitted. Get a specialist involved. It is slippery if not done correctly.

Co-Production Equity

Money contributed by production partners — often international co-production partners — and usually connected to territory rights. If you partner with a Canadian producer to benefit from their local tax credits and grants because 50% of your film takes place there, they may also invest directly and want their domestic territory rights in return.

As with corridor participation, do not give this away without consulting your other partners first. And when it comes to co-productions, do not forget the cost implications — there are significant costs involved that never appear on screen, which I will cover in depth in Season 2.

Talent Equity

Money put in by actors, directors, or producers. I have personally invested in films myself. Talent equity takes two main forms.

Sweat equity, also known as deferred fees, where talent accepts a lower upfront payment in exchange for a larger backend position. Be careful here — deferred fees can affect your tax credit calculations, so take advice before structuring this.

Service investment, where talent contributes a portion of their fee back as an investment for more points on the backend. If you genuinely believe in a project and can manage on less for your living costs, taking a £100,000 fee and investing £40,000 of it back in is a legitimate and effective structure. The same logic applies to post houses, studios, music providers, and rental houses. The word I want to emphasise here is genuine. You cannot pay yourself £1 million, invest £900,000 back in, and claim tax credits on the full million. That is tax fraud. It is a crime. Do not do it.

Gap Equity

Functions similarly to preferred equity but is structured differently and connects to the gap financing tools I will cover in the next episode.

Strategic and Corporate Equity — Brand Partnerships

Usually from brands that invest in exchange for product or brand integration in the film. I prefer to call this Brand Partnership rather than product placement, and I look for genuine cash investment rather than just free product.

To make this work, you need to establish a value proposition against the brand's existing marketing model. If they spend £1,000 on Meta paid ads, what do they get in return? How does investing in your film beat that? You have longer shelf life. You have talent associated with the project. You can create vignettes featuring their product. You can generate behind the scenes content they can use in their own campaigns post-release. And you can also offer something beyond cash — brand partners can contribute P&A value if structured correctly, which takes pressure off your release budget.

The Two Categories

When you step back, all equity breaks down into two buckets. Senior equity — preferred and participating equity from serious investors — and junior equity — pure equity, producer equity, and talent equity, which are the higher risk participants. Understanding where each investor sits in this structure before you start building your finance plan will save you enormous headaches later.

How to Structure an Equity Deal

Before the deal itself, you need to think about your company structure.

Are you operating under a production company or a Special Purpose Vehicle — an SPV? Both have legitimate uses and meaningful differences.

A production company allows you to access SEIS and EIS but means shares in the company are issued to investors — and once issued, they are gone. A production company also comes with ongoing administrative obligations: confirmation statements, tax returns, annual accounts. When you have ten films in the can across multiple companies, the cost and time of managing that can become significant.

An SPV — a single purpose vehicle — is a separate limited company created specifically for one film. It isolates risk, which means if the film has problems they do not contaminate your other projects or your main company. It is the cleaner structure for a single production.

Whichever you choose, register a limited company on Companies House. In the UK this costs £50. Once it is live, take the administration seriously from day one.

The Step by Step Process

Step one is initial outreach and qualification. Filter time wasters by sending only your pitch deck at the start. Do not send the script yet.

Step two is the NDA. If they express interest, send a Non-Disclosure Agreement before or alongside the script. Some investors, particularly cold contacts, will resist signing NDAs — use your judgement based on how you were connected and the nature of the relationship. Once the NDA is signed, send the script and give them genuine time to read it. Do not pester. Investors are busy and get alienated by excessive persistence.

Step three is the investor pack. If they like the deck and the script, send your exec summary and financial documents. Be fully transparent about fees and costs. You are setting the bar for how you operate and establishing an honest relationship from day one. Be prepared for questions — this is usually where deals are won or lost. Handle queries with swift, professional, and considered responses.

Step four is securing a soft commitment. Get an LOI — Letter of Intent — or at minimum an email confirmation of intent. If possible, ask for proof of funds from a financial management company. This gives you something to leverage with other financing partners while you work toward formal commitment.

Step five is the heads of terms. Get a lawyer to draft these. It is a critical stage — heads of terms essentially lock the investor to the project even before long form legal documents are signed. They should cover the investment amount, equity percentage or share class, recoupment position, any premium, profit participation, voting rights, approval rights over cast or budget, reporting obligations, the SPV structure, and the waterfall position.

Step six is legal agreements and financial close. By this point you have them on board — but long form legal documentation can still undo everything if not handled carefully. I typically shift my focus to lawyers at this stage and redirect my energy toward building the creative and personal relationship with the investor. If any friction points arise in the long form, a warm relationship means they can usually be resolved with a phone call.

The key documents at this stage are a Shareholders Agreement, Subscription Agreement, SPV Articles of Association, and Recoupment Schedule. Financial close — the real greenlight moment — is when all investors sign in sync, funds are committed or placed in escrow, and legal documents are fully executed.

And a final note that is more important than most people realise — once they have committed, maintain quarterly reporting. Do not let the financial dialogue go dark. Trust me. This is one of the most underrated aspects of investor management and we will cover it in more depth in the relationship section.

The Psychology of Raising Equity

If you approach equity raising with the wrong psychology, you will either undervalue your project, overpromise returns, or fail to close. This is not soft advice. It is about adopting the correct operating mindset for a high-risk capital environment.

Stop thinking like a filmmaker. Start thinking like a capital allocator.

Most producers approach investors emotionally. They say things like "this is a great story." Investors think: is this a rational deployment of capital? You are not selling a film. You are offering a speculative asset within a volatile asset class. Find analogies from industries investors already understand — the property market, tech startups, anything they have already had success in.

Internalise the risk properly.

Film equity is high-risk, illiquid, and opaque. If you do not fully accept that, you will overstate certainty, damage trust, and attract the wrong investors. You should be able to say, confidently: "There is a real possibility you lose 100% of your investment." Counterintuitively, this builds credibility. It filters serious investors and positions you as competent. Think of it like the jam analogy — it is business, and serious investors are smart enough to know there are never guarantees.

You are structuring risk, not eliminating it.

The psychological trap is trying to convince investors it is safe. It is not. Show instead how you reduce downside through cast, genre, budget discipline. Show how you increase the probability of recoupment. Show the multiple revenue pathways. That is what serious investors want to see.

Detach ego from outcome.

Rejection is not personal. It is not creative criticism. It is capital declining a risk profile. You might hear twenty to fifty nos before a yes. If each no affects you emotionally, your pitch quality drops and your momentum collapses. Build the resilience to treat rejection as data, not verdict.

Precision over passion.

Passion is expected. It is not persuasive on its own. Investors respond to clarity, structure, and control. Replace "this will be amazing" with "here is how we recoup." Every time.

Understand investor psychology.

Most film investors are not purely financial. They are typically a mix of emotional — they love film — status-driven, curious about the industry, and occasionally financial. Your job is to position the opportunity across all four dimensions simultaneously. Financial upside. Access — set visits, premieres, credits. Prestige — association with something culturally significant. And narrative — being part of something that matters.

Control the narrative of risk versus reward.

Bad positioning sounds like: "This could be the next big hit." Strong positioning sounds like: "At this budget level, with this cast profile and genre, we are targeting this range of outcomes." You are not pitching a dream. You are framing a probability spectrum.

Develop repetition resilience.

Equity raising is high frequency rejection with delayed reward. Think in terms of pipeline and conversion rate, not individual conversations. Build consistency in your pitch delivery and emotional neutrality in your process.

Become comfortable talking about money directly.

Many creatives avoid this. It is a mistake. You must be able to state investment minimums, explain return structures, discuss downside scenarios, and negotiate terms without hesitation. If you cannot do this, practise until you can.

The most important reframe of all — you are not asking for money. You are offering access.

Weak mindset: I need investment. Correct mindset: I am offering entry into a structured opportunity. This single reframe changes your tone, your authority, and your ability to close. And it is the difference between producers who build careers and producers who spend years wondering why nobody bites.

Prioritise long-term trust over short-term close.

If you overpromise, misrepresent projections, or hide risk, you might close once. You will not raise again. Film finance is relationship-driven and reputation-sensitive. Your reputation is your most valuable long-term asset in this business.

Think in portfolios, not projects.

Serious investors think about how an opportunity fits into their overall portfolio. Position your film as one opportunity within a broader strategy — a potential gateway to future deals. Not a one-off punt.

How to Find Investors

Here is what most people have been waiting for.

Direct sourcing — online and database mining

LinkedIn, Stage 32, and IMDB Pro are your primary tools here. On IMDB Pro, reverse engineer films similar to yours — similar budget, genre, territory, release date — and identify the Executive Producers. Start mapping patterns. Who has invested more than once? More than twice? How recently did they invest, because if they closed a deal six months ago their capital may be locked up. And establish the difference between broker EPs who facilitated a deal and actual investor EPs who put their own money in.

Warm introductions

The highest conversion rate of any sourcing method. Producers you have worked with before, sales agents, entertainment lawyers, accountants, and high net worth networks are all legitimate sources. When approaching people for introductions, frame it as seeking connections rather than asking directly — something like "I am looking for active investors interested in X opportunity, do you know anyone who might be relevant?" Not "can you invest."

Physical ecosystems

Do not underestimate the power of face-to-face. A first impression in person is more powerful than any email, phone call, or Zoom. Film markets like EFM, Cannes, AFM, and Content London are primarily sales driven but equity investors do attend. You just need to know where to find them — usually at the parties, often as guests of other filmmakers. Respect boundaries and respect your fellow producers.

Beyond film markets, equity conferences in London and other cities attract investors from multiple industries. The unlikely opportunity has genuine value. I have heard stories of pivotal investor relationships beginning at completely unrelated events. Track those summits down.

Building your CRM

Once you have found investors, track everything. Build a Customer Relationship Management spreadsheet — I use Google Sheets but Hubspot, Airtable, and Monday.com are all legitimate options. You will speak to hundreds if not thousands of people in this business and the details matter. The investor whose child was just born when you last spoke, who is now starting school — remembering that breaks down a wall of rapport that no pitch deck can create.

The categories I use are: Name, Type, Ticket Size, Risk Appetite, Geography, Relationship Status — cold, warm, in discussion, LOI stage, closed — and an Interaction Log with key notes on both professional and personal dialogue plus the date of last contact. Do not let those relationships go cold.

How to Make Contact

Reiterating from the psychology section — you are not contacting. You are positioning.

Cold outreach

Your first message needs to be a precision communication. Who you are — keep it brief and credible. Why them — show you have done your research. A soft hook. And a low friction ask.

Something like:

Hi [Name], I came across your involvement in [Film Title] — particularly interesting given its positioning in the [genre/budget range] space. I'm a London-based producer currently structuring a slate in a similar bracket and I'm mapping investors who are actively working in this range. Would be great to connect and exchange notes — no pitch, just context.

Why this works: it signals relevance, shows research, removes pressure, and opens a dialogue. It might lead directly to investment. It might lead to an introduction. Most of my investors have come through investors introducing me to other investors. Never underestimate the network effect.

Follow up with 2-3 lines maximum. Add value each time rather than simply repeating. Mention progress — a new talent attachment, a closed finance partner, a reduced ask because another investor has come in. Give a sense of the train leaving the station without making them feel pressured.

Warm introductions

Do not jump straight into a pitch. Build rapport first. Take them for lunch and pick up the tab — or at least pay your way. If they insist on paying, offer a drink afterwards at a different venue. A nightcap has worked for me more than once to anchor a relationship.

In person at events

Always show interest in what they are doing first. Only reveal your own ambitions when they ask. If they express interest, explore it. If they do not, I have experienced a very high conversion rate of failure when rapport was never established — because they have often already made a subconscious decision. Pay attention to the tells. If they say "that's interesting, tell me more" or "how does that investment structure work" — they are already processing the risk. That is your signal.

Maintaining Momentum and Handling the Relationship

Set and control the timeline without being demanding. Always close each conversation with a commitment on your end — "I'll send the investment pack tomorrow" — and if you say tomorrow, make it tomorrow. Reliability is everything in this relationship.

Break the relationship down into micro progression points: Introduction, Materials, Follow Up, Clarifications, Soft Commitment, Heads of Terms, Close. When you get stuck at a stage, use social proof — a talent attachment, a new finance partner, a reduced ask. Give them a reason to move.

Control the release of information deliberately. Do not send everything at once. It overwhelms and helps the relationship go cold.

Establish scarcity without pressure. Say things like "we are looking to lock positions over the next few weeks." Broad, but with goal posts. It creates momentum without ultimatums.

And once they are in as an investor — do not let them go cold either. Quarterly reports. Event invitations. The occasional lunch or coffee. If you share a pastime — golf, sport, whatever it might be — use it. You can give flash updates in passing as the conversation naturally allows. Never push. But always stay connected.

Final Thought

Raising equity is not just about asking for money. It is about understanding risk, structuring opportunity, building trust, and positioning yourself as someone who can responsibly handle capital in one of the most unpredictable industries in the world.

Investors are not just backing a project. They are backing you — your judgement, your discipline, your honesty, and your ability to turn risk into a structured opportunity. Be patient. Be clear. Be professional. And above all, be resilient.

In Episode 3 we move on to the wider finance stack — gap finance, bridge loans, tax incentives, and how all of these pieces fit together to close a film properly.

Next Up: Episode 3 — Tax Credits, Bridge and Gap Financing

If you wish to book a consultation session to discuss your project, feel free to drop me a message using the form below!