Raising money for a film is one of the biggest challenges in the industry—and often the most misunderstood. While every production is different, most are funded through a combination of equity, debt, and soft money. Understanding how these sources work together is essential for getting your project off the ground.
Equity Investment
Equity refers to investment capital given in exchange for ownership in the film. This can come from individuals (often called angel investors), production companies, corporate brands, or venture funds. Equity is flexible and doesn’t require repayment, but it’s typically the most expensive form of financing because investors share in the profits—and the risks.
Early-stage equity is also the hardest to raise, since investors are backing a creative vision before there’s a full financing plan or any attached distribution. That said, equity investors often receive perks like producer credits, back-end participation, or even priority recoupment.
Debt Financing
Debt is borrowed capital that must be repaid—typically with interest—regardless of how the film performs. The most common form of debt in film is a gap loan or bridge loan, often secured against contracted income such as tax rebates, distribution deals, or presales.
While riskier for the producer (since repayment is fixed), debt is usually cheaper than equity in the long run. Many banks now offer film-friendly lending services—especially in markets with strong tax incentives.
Soft Money and the UK’s AVEC
Soft money refers to non-repayable public funding. This includes grants, subsidies, and most commonly, tax incentives. In the UK, the Audio-Visual Expenditure Credit (AVEC) is the latest version of the country’s renowned tax rebate system. Offering up to 34% back on qualifying UK production spend, AVEC is one of the most powerful tools in the producer’s financial toolkit.
Unlike equity or debt, soft money reduces your capital requirement without diluting ownership or increasing debt. But it can take several months post-completion to receive, which brings us to an important opportunity…
Leveraging AVEC as Collateral
Because AVEC is reliable and government-backed, it can be used as collateral to access loans during production. With a proper budget, schedule, and accountant sign-off, producers can borrow against their estimated AVEC payout—often up to 80–90% of the total value.
This allows you to use future AVEC income to cash flow production today, with the loan repaid once HMRC issues the credit. For many UK-based productions, this kind of structured debt is a lifeline—allowing for a more robust and cash-secure shoot.
Cash Flowing AVEC Through Private Equity
If a bank loan isn’t accessible, private investors can also be brought in to cash flow the AVEC. In this scenario, an equity investor fronts, say, £80,000, to enable production to move forward. Once the AVEC is paid—let’s say £90,000—the investor is repaid their capital plus a guaranteed return.
This model offers early investors a clear and low-risk exit strategy, making it more attractive than speculative box office returns. When structured correctly, it rewards “first-in” investors with guaranteed profit using only the tax credit, while leaving the rest of the project’s equity or profits untouched.
The “First Money In” Principle
Among all the challenges of film finance, the most difficult hurdle is securing the first money in. Without that initial capital, everything else stalls—budgets remain theoretical, partners hesitate, and confidence lags.
But once that first cheque is signed, everything changes. Investors gain faith. Funders take you seriously. Soft money becomes more accessible. You gain momentum.
Whether it’s from private equity, a production company, or even friends and family, the first investment is often the most important one you’ll ever raise. It sets everything else in motion.
If you’re putting together your finance strategy and want support packaging your project, get in touch. We’re all on this journey together to create sustainable business in Feature Film production.
Red Robin Films 
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