Jason Hellerman of No Film School interviews Ariel Heller and Sam Baron about financing in How ‘Circles’ Is Using Radical Transparency and an Equity Model to Build an Indie Feature.

Jason quotes Ariel:

“In the traditional finance model, indies rely on underpaid labor, opaque accounting, and the promise of exposure that rarely materializes into real participation. Whereas in this equity model, everyone from director to PA works for the same rate (a competitive indie wage pegged to the SAG minimums) in exchange for equity. Most crews never see a budget, never understand a waterfall, and never receive a dollar after wrap. By opening the books, educating collaborators on the model itself and giving access to budgets and cap tables, we remove the suspicion that has defined so much of the industry. Transparency builds confidence, and confidence builds better work.”

Their inspiration comes from Clint Bentley and Greg Kwedar. See their Ethos Equity Financing Model.

See Wrapbook to understand traditional Equity Financing.

My take: I like the thought behind this. Using “set time” to determine equity gets everyone in the game, however, it also devalues intangibles like a screenwriter’s years of rewrites, a cinematographer’s film school debt and an actor’s clout. To make this work, I think you’d have to assign in-kind value to these and other intangibles and add this to the Investor side. Then 60/40 to 120%, followed by 50/50 could make sense. Basically, this model has craftspeople in front of and behind the camera share 40% of all income from the first dollar, distributed by time worked, hopefully rising to 50% at some point.