04.12.08
An Evening With Lew Horwitz, Part 1
Lew Horwitz has been described as one of the true greats in independent film financing. He has over 35 years of experience in the entertainment financing business and has funded hundreds of films during that time, including the very successful My Big Fat Greek Wedding. So when I found out that IIFF was sponsoring a film financing workshop featuring Mr. Horwitz as the speaker, I knew I had to attend.
Wednesday night’s workshop was located at the Academy of Art University’s auditorium on New Montgomery street in San Francisco. It’s not the usual location where IIFF workshops and meetings are held, so I made sure to leave early so that I would have plenty of time to find parking, which can often be a challenge in the City. Fortunately, I got there in plenty of time and was able to chat with other attendees while we were waiting. I, also, caught a glimpse of actress Diane Baker, who attended the workshop, and is currently a Co-Director at the University.
Lew was very charming and entertaining. Occasionally, he would take a break from speaking and entertain us with magic tricks, which were a lot of fun to watch. He’s quite good.
Some of the material he covered I already knew, some of it clarified things for me, and some of it was new. Starting with the basics, there are three ways to finance a film:
- Studios
- Investors
- Borrowed Money
Studio financing is great if you can get it, and that’s the trick…if you can get it. It’s rare for independent films to get studio financing, which is why independents usually fund their film by means of borrowed money (debt financing) and/or investors (equity financing). This is a good time to define what debt and equity financing is for those of you who may be unfamiliar with those terms.
- Debt financing is money that is borrowed from a bank and must be repaid with interest. One of the advantages to debt financing is that the lender does not gain ownership interest in the film. Once the debt is paid, your obligations to the bank are over and all profits from your film are yours to keep.
- Equity financing is money received from investors in exchange for interest in the film. The advantages to this type of financing is that you don’t go into debt to obtain funds and the risks are distributed among the investors. A disadvantage is that you don’t keep all of your film’s profit.
Most films are financed using a combination of debt and equity financing. That’s putting it very simply. It actually gets far more complicated as you will see later on. I already had an idea how complicated financing can get and I find the whole process very fascinating. During the break, however, I overheard conversations from some in the audience who were hearing the information for the first time. They were freaking out a bit when they found out what was involved to get their film funded.
Lew taught us about funding our films using the third option: borrowed money (debt financing). I’m going to stop here for the evening and pick it up again in part two. There’s a lot of information to cover and I think it would be better to split it up into several posts.