Your YouTube channel is monetized and you are regularly creating content and looking to improve your videos and grow your audience. To keep up with the competitive landscape of video content you are not only competing against other social media creators but also television shows and movies that can occupy your audience's screen time. While movie and TV production has access to massive teams and budgets to produce high quality content, YouTube creators are often on their own or in small teams to develop their channels - yet can have just as big of an audience. Do you look at the video content you develop as similar to film and tv production and how do you navigate the financing opportunities available?
Production financing for YouTube is a way to secure money for creating new content for your channel. This may be through grants, incentives or loans. Or possibly a combination of all three. This blog aims to help you understand how production financing works and what options are available to you.
Are you a food content creator? Imagine having enough money to travel the world and introduce new foods to your audience with the help of locals. Entertainment influencer? Travel to filming locations to interview the hottest celebrities about their latest projects. Do you need new equipment, an editor, a videographer, studio space or to create a product line?
Everything that you do to bring new content to your channel costs money to make happen. If done right, the content leads to more subscribers and views, which in turn brings in more revenue. Production financing is how you make the magic, and the profits, happen for you.
Without production financing, most YouTube creators wouldn’t be able to afford to keep making fresh content and pushing the boundaries to achieve their creative and business goals. Many have given up control and ownership to get funding to produce the content they are looking to do. To ensure you are not selling yourself short it is important to understand all your options and what they mean for your future content but also how much it could cost you. The right production financing should always profit you and open up new possibilities for your channel, so choose wisely.
Understanding Production Financing
Production financing refers to the financial support provided to creators to fund their video projects. This support can come in the form of direct investment from YouTube or from third-party companies that specialize in financing content creation.
YouTube offers various programs and initiatives to help creators secure funding for their projects, including the YouTube Creator Fund, which provides financial support to creators with large audiences and high-quality content. Alternatively, this could be through earnings generated from YouTube Advertising revenue.
Third-party financing companies also offer production financing for YouTube creators are likely where the majorities of creators would be receiving their production financing, and likely where they would also see the biggest amount of funding offered. These companies may provide funding in exchange for a percentage of the revenue generated by the content, or they may offer loans that are paid back over time.
Production financing is any money or incentives that you get to help with the costs of creating from an outside source. It can be money that you have to pay back or be given in return for rights/revenue or even not have to pay back at all. All of it is considered under the 2 different types of production financing which we will refer to as Soft Money and Hard Money.
Soft money is any money or incentives that you as a creator can get to finance your production that you don’t have to pay back. This includes incentives such as tax rebates and credits as well as grants from the government or from charitable and non-profit organizations. Check out EP’s Beginner’s Guide to Production Incentives for more info on incentives and how they work. This could also be money set aside from revenue such as AdSense on YouTube video.
While soft money is the great because you don’t pay it back, it is difficult to come by and often has restrictions, especially in the case of incentives and tax rebates. Many are tied to location, so you will need to prove the money is used in the area and that all local businesses are paid in a timely manner. As YouTube creators especially ones that are more established and generating high monthly earning the rebates and tax credits may not exist or be enough to finance big projects.
Hard money can come in terms of equity in your content, royalty payments or straightforward loans. Giving up equity or royalties in your channel could mean giving up creative control, rights to earning on past content and even stipulations on the type of content you produce going forward as well as adhering to strict posting schedule.
As a successful YouTube creator, you may find that you need the same sort of money that film and TV production require, yet your production financing options are limited in comparison. Banks may give you a small business loan, just get ready to dance through hoops. Your other options are investors who will limit your control or even your earnings. Look for a funding partner that gives you access to the financing you need with maximum opportunity to create the content you are looking to produce. Be aware of what you are receiving in cash for the financing deal but also be aware of what it may cost you or your channel in other respects such as time, creative restrictions or capped ad revenue earnings.
YouTube Production Financing with Breeze
Aptly named, Breeze is the simplest way to find production financing for YouTube creators. This platform focuses solely on funding YouTube channels and is built by a team of entrepreneurs who feel that content creators are giving up too much for production financing. And that creators work too hard to give up control, ownership and profits.
Breeze offers a traditional loan in that you get money from us that you pay back over time. We offer a simple cash advance to help to grow your channel and the only requirements are that you keep your channel live and that payments be made from your revenue. This way you can keep expanding rather than putting all your profits into making loan payments.
In just about every other way, we are not like a traditional loan from the process of acquiring the loan to the payback process. How can we do things differently? We built a platform that uses an algorithm that analyzes your channel’s AdSense data over the past two years. No need for long explanations and tedious charts to plead your case. Your channel speaks for itself.
Breeze is completely transparent as to how we determine how much financing you can get from us. Visit this Breeze webpage to get an approximate calculation for yourself. When you are ready, you can link your Google account so Breeze can get the full picture of your channel and audience.
Another thing that sets Breeze apart from other lenders is that you don’t have to explain what you spend the money on or worry about receipts and invoices for proof. You spend it where you deem best for your channel’s success. End of story. On top of that, Breeze is tax-free cash with tax-deductible payments. No other lender offers that, not even Breeze’s closest competitor.
And if all that isn’t enough, here are some other things that set us apart. You don’t have royalty payments and you have fixed payments, a flexible payment schedule and the option to pre-pay so you can pay back the loan more quickly if you desire. No dancing through hoops, stressing about payments or differences of opinions with investors. You are your only investor with Breeze.
Steps for Obtaining Production Financing
If you choose to look for investors for your production financing with traditional 3rd party investors like a bank or go the similar path as many traditional media companies with support from TV/movie production studios there may be more steps involved to get the capitol you need. Here are five steps to successfully get production money.
- Creating a business plan - a business plan is a report on your channel at the present time and a forecast of your expected growth during the next five years. This includes your business goals and your method for reaching them as well as documents/research to support the veracity of your plan.
- Finding the right investors - there are numerous sites online that connect investors with people looking for money. Make sure that your ideals and the investor’s are aligned before pitching them. An investor with religious values isn’t going to fund your adult entertainment channel so no point in wasting everyone’s time. You have built up an audience and loyal subscriber base and they have come to expect certain quality and level of trust from you, make sure that you are partnering with investors that understand you content and respect your audience.
- Pitching to investors - this is where your business plan comes in very handy. You need to let the investors know where your business is at present, where you plan to take it, how you plan to do that and most of all how it will profit the investors. While traditional movies see their revenue come from avenues such as box office sales YouTuber investors need to have an understanding of how the YouTube AdSense structure works and risks involved.
- Negotiating terms - having a lawyer involved with the negotiation of an investment loan is a must. You need to be aware of how much you are giving up and what you will get in return. Since an investor can have a large say in the production, make sure everything is spelt out from what each gets to how much control each of you has. If you are giving up your back catalogue of YouTube content, are you aware for how long and how they are able to use your content. Understand what your investors get out of the deal just as much as what you would get.
- Closing the deal - according to Entrepreneur, there are five rules to closing a deal with an investor. They are: estimate what you think you need and double it; estimate revenue optimistically but support your numbers; retain a controlling stake; project confidence and passion; and lastly bring investment documents to the meeting.
Best Practices for Managing Production Financing
Once you have secured the money from your investors, you need to look at how to best manage that money. When you did your business plan, you did budgeting and forecasting. Now it is up to you to keep to that plan. Included in this should be ensuring that you fulfill all obligations to your investors that you agreed to in your negotiations and deal closing.
For your own sanity and good PR, keep your investors in the loop. If you don’t, don’t be surprised if you end up with a lot of time-consuming calls asking for updates. Keeping your investors happy just makes good business sense. Lastly, do contingency planning. In other words, have a plan B, a backup plan, a “what if” scenario just in case. YouTube has set rules for monetization and can have some ebbs and flows in terms of revenue from AdSense. If you are expected to pay back investors a set amount every month, what happens if this amount is above your AdSense revenue for that period? Are there restrictions or quotas on what you can post and how often you are required to upload? To ensure that you are not being surprised with any unexpected costs or legal issues you are not prepared to meet, ensure that you are very clear on what the terms are after the funding has been received.
Alternatives to Production Financing
There are a number popular alternatives to securing production financing, include crowdfunding, brand sponsorships, YouTube revenue sharing and government grants and loans. Crowdfunding is when you ask numerous people, usually on the Internet, to help fund your production. This money doesn’t have to be paid back as it is people essentially donating to your cause.
Finding brands that align with your channel’s focus can bring you big sponsorship money. Say that you are a beauty influencer with a large audience of over 40-year-old women, then a brand like Olay may be happy to pay you for product placement as well as for using and promoting their product on your channel. You are giving them value for their money by targeting their brand awareness to their ideal audience.
YouTube revenue sharing is done by pooling all the advertising earnings from the channel that is running videos from numerous content providers. A portion is then allocated to a “creator pool” based on the views of all the videos. This is particularly useful for short videos. An example is the Super Simple Songs channel which plays videos from various children’s song content creators.
Finally, government grants and loans are available, especially for underrepresented content. Check out QuickFrame’s blog Grants and Resources for Underrepresented Content Creators for more info.
Examples of Successful Production Financing with Breeze
When Jared Pink from The Questionable Garage found his YouTube channel gaining popularity, he needed to create new content quickly. The problem is that car parts companies are notoriously slow and expensive to get the parts to a garage. This means that he had to put out money months in advance to secure the parts, leaving Jared with no capital with which to create content.
Jared approached Breeze for production financing. After using our algorithm with his data, we were able to offer him the money to create content. This took both the financial and mental stress off of Jared. It allowed him to create content freely while planning months in advance, ensuring he’d get the parts in time for his scheduled content creation.
David Hoffman of the Davidsbeenhere YouTube channel has been traveling the world checking out local foods and historic sites since 2008. When he connected with Breeze, he needed to increase his capacity for filming and video output. With Breeze’s production financing, David was able to book his trips and plan his videos months in advance.
Breeze doesn’t get involved in what you spend your financing money on. It is up to you, as the content creator, to decide where the money can help grow your YouTube business. Some use it for product development, but likely the most common use is the funding of building a team which can help increase video quality and quantity.
Most creators start as a 1-person operation. This means that you handle all the planning, operations, filming and editing. This cuts into your content creating time and headspace. As your channel grows, Breeze can help with the funds to expand your team and hire the people to make your production run more smoothly and improve the quality.
If you treat your YouTube channel as a video production business in order improve your content quality and potentially speed up the turn around on developing new content, it may be imperative to have the financial backing to support the goals you have for your videos and channel. Figuring out which way you are going to get the production financing is up to you. As YouTube creators the options may not be as commonly known as they are for traditional film or tv but there are still incredible opportunities. Financing option can differ greatly depending on which avenue you take so make sure you look into how option differs and how they work for your business, financially, creatively and the future you see for your channel.
If you were to be completely independent and save up the funds through AdSense, paid partnerships or sponsorships this may be a long road to get the large sum of cash needed to boost your business. Applying for funding from grants or programs through YouTube ads an extra level of uncertainty if you are eligible and then selected to receive the grant.
Other more traditional funding options like banks and production lending companies are familiar with TV and movie financing and would require a lengthly process to get cash and potentially a lack of understanding of the YouTube production space.
Lately investors have seen huge value in owning equity in YouTube channels but for the creator that would mean losing full control and ownership of your content. If you go this route, it is advisable to only offer enough that you still retain control. It would be a shame to work so hard on your channel, just to give up control and revenue to an outside party.
Newer businesses, like Breeze, have seen the gap in the market and are now starting to treat YouTube channels as business with straightforward loans that are quick and transparent. Breeze stands above all other traditional lenders in their approach to every aspect of the money lending process. Of course, we want you to pay us back, but we aren’t looking to milk you nor are we interested in controlling your business. We are a team of entrepreneurs first and foremost that enjoys seeing your YouTube channel thrive.
We don’t want to restrict your creativity. You just continue doing what you are good at and we are there to support your efforts and help your business grow. You pay us back in fixed payments from the revenue generated by your channel, not a percentage nor from royalties. And you can pay us back more quickly if you desire.
So, now you know your options, you can make an informed decision of where to secure the production financing needed to expand your YouTube business. Whether you use the money to build a team or for travel expenses, in the end it all goes to creating fresh and interesting content to grow your channel.