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How Can You Get Others to Invest in Your Comic? (Part II)

gamalhennessy Community • Oct 8, 2020


Last week, we started talking about finding outside investment for your comic (See How Can You Get Others to Invest in Your Comic?) I’m going to finish off the list of different types of outside investment this week, but keep in mind we’ll go more in-depth in on this list during our free comic book financing webinar on October 29th.

1. HELOC
a. Description: A Home Equity Line of Credit Loans (HELOC) is a loan that provides a line of credit using your home as collateral . The amount of money available to you depends on the amount of equity you have in your home and your credit rating.

b. Advantages:
i. HELOCs are similar to credit cards in that you only pay interest on the amount of the credit line that you use, not the entire amount of the credit line.
ii. The interest rates on HELOCs are typically lower than the interest rates on personal loans.

c. Disadvantages:
i. Failure to pay a HELOC loan will result in a negative impact on your credit rating and could force you to lose your home to foreclosure.
ii. Interest rates are variable, which means monthly payments can be unpredictable for both you and your publishing budget.
iii. In the event the value of your home falls, your home could go underwater meaning that you could end up owing more money than your home is worth. This will make it harder for you to sell your home or refinance your mortgage in the future.

d. Considerations
i. Be sure that you read and understand the terms of any loan agreement you are considering. Consult your accountant and attorney whenever possible.
ii. Consider developing alternative methods for paying off any loan that are not tied to the financial success of the comic as a contingency position
iii. Remember the economic realities of comics and only invest funds that are not vital to your survival.


2. Personal Loans
a. Description: A loan is money borrowed from a bank, credit union, or individual. Depending on the terms of the loan, you’ll have to repay the money within a certain period of time with an additional amount of interest paid on top of the money you borrowed.

There are two major types of loans: secured or unsecured.

i. Secured Loans: You can get a secured loan if you have an acceptable form of real or personal property to serve as collateral for the loan. If you repay the loan amount and interest, you get to keep the collateral. If you fail to repay the bank, they can take ownership of your collateral and sell it to recover the unpaid loan amount. If the sale of your collateral does not cover the full loan amount, you are still responsible for the unpaid balance.

1. Advantages:
a. A secured loan does not necessarily require a high credit score because the loan is backed more by your collateral than your promise to pay.
b. A secured loan amount is often higher than an unsecured loan amount depending on the value of the collateral

2. Disadvantages:
a. Failure to pay a secured loan could result in the loss of your collateral. Because publishing comics is an inherently risky investment, using a secured loan to fund a comic puts your collateral at substantial risk.
b. Failure to pay a secured loan will also result in a negative impact on your credit rating.

3. Considerations:
a. While there is a loan market for intellectual property, it is highly unlikely that any bank would accept your unproven comic book concept as adequate collateral for a secured loan. Because there are no sales, there is no proven value in the property. While loans based on entertainment IP are [url=https://cpip.gmu.edu/2017/05/11/from-star-wars-to-la-la-land-how-intellectual-property-fuels-films/, you’re probably going to need more than your pitch package to get a secured loan.

ii.garnishment, or other means.

1. Advantages: Your loan is tied to your perceived ability to pay and not any specific collateral that you own.

2. Disadvantages:
a. Loan amounts are generally lower because of the lack of collateral.
b. Failure to pay an unsecured loan can lead to prolonged harassment from the banks, including litigation and possible bankruptcy.
c. Failure to pay an unsecured loan will result in a negative impact on your credit rating.

3. Considerations:
a. Be sure that you read and understand the terms of any loan agreement you are considering. Consult your accountant and attorney whenever possible.
b. Whether you get a secured or unsecured loan, when constructing an overall budget, be sure to include repayment of the loan and interest as part of the financial calculations.
c. Consider developing alternative methods for paying off any loan that are not tied to the financial success of the comic as a contingency position.

3. Private Investment:
a. Description: Private investments come from individuals or groups who provide money to help businesses get off the ground in exchange for ownership of part of the business. Private investments are different from gifts because the money is provided in exchange for the potential in the IP. On a certain level, other creators who agree to work on your project in exchange for some ownership of the book are a form of private investment. Getting into a creator-driven deal with an established publisher is also a form of private investment for comics. While independent comics are still a rare choice in the mainstream investment world, the [url=https://www.creativecontractconsulting.com/c3blog/2018/12/10/positioning-your-book-for-the-coming-content-war could inspire investors to try and get a piece of the next new cinematic universe.

b. [url=https://www.business.com/articles/pros-and-cons-of-angel-investors/">Advantages:
i. Money that comes from a private investment does not need to be paid back. If the business fails, the investor loses their money and can’t go after any of your property.
ii. The criteria private investors have for their business can be more flexible and open than other types of financing.
iii. Investors familiar with business in general or comic book publishing, in particular, can offer expertise in addition to funding.

c. Disadvantages
i. You have to give up a portion of ownership and control of your company to the investor. This could limit both the types of comics you create and your ability to enjoy the profits from the business if the book is successful.
ii. Private investors often focus on being able to get their money back from their investment plus interest within a certain period of time. This can be a challenge in an industry where profits are not guaranteed.
iii. Finding and pitching your idea to potential investors could take up a lot of time that you could be using to create your book.
iv. The demeanor and personality of an affluent investor unfamiliar with comics could create friction in a creative environment like comic book publishing.

d. Considerations
i. Evaluate every potential investor from a personal interaction perspective as well as from a financial perspective.
ii. Every potential investor must sign some sort of contract.
iii. Be sure that you read and understand the terms of any investment agreement you are considering. Consult your accountant and attorney whenever possible.

If you decide to get outside funding for your comic make sure you understand how much you are receiving, what you have to pay back, and what you are giving up. Avoid any deals based on vague or unclear terms and don’t believe any promises of “free” or “easy” money. Comic book publishing is not an easy money business. Don’t sacrifice your IP or your secret identity chasing a financial scam.

After all this talk about using your money and other people’s money to fund your comic, I’m sure you’re wondering why I haven’t talked about one of the biggest sources of comic book funds in the last few years: Kickstarter. I didn’t forget about it, but Kickstarter and other forms of crowdfunding are sources of revenue, not investment. Once you begin making your comic, you can use your IP to generate revenue through crowdfunding, donations like Patreon, subscriptions, advertising, merchandise, and of course, sales of your comic. But you have to put the investment into your business before you make any revenue.

Have fun with your comic
Gamal