Karaganda is a Title III - Regulation Crowdfunding Campaign and is actively accepting investments.
$100.00 minimum investment

Karaganda

Feature Film

Regulation Crowdfunding
Newport Beach, CA
Art
Accepting International Investment
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Want to invest in a film with a viable proof-of-concept? 

Invest in Karaganda, LLC

SUMMARY: Vladimir is a prisoner in a Soviet prison camp on a mission to rescue his wife who is also imprisoned in the Karaganda region. In order to rescue her, he must join the Vory v Zakonye, a criminal organization that controls the camps. The Vors succeed in finding her, but at a cost that will haunt Vladimir as he transforms into a powerful crime boss in Brighton Beach, Brooklyn. 


KARAGANDA is an action film based on an award-winning thesis short filmed at the prestigious American Film Institute (voted #1 film school in the world by The Hollywood Reporter in 2011 - the year director Max Weissberg entered). This 26 min. short screened in 26 film festivals in 13 countries, earning 5 awards. Unlike the short, the feature will be in color. Note this short film was produced by "DBA LosFilm CA," a company separate from Karaganda LLC (but directed by Max Weissberg, the CEO of Karaganda, LLC).


Despite the worldwide prevalence of the Russian mafia, few films have dug deep into the inner workings of the Vory v Zakonye, an elite Russian organization going back to the time of the czars. Even fewer have told stories from the POV of someone inside the Russian mafia.  


Like THE GODFATHER, KARAGANDA will establish the genre of Russian mafia films by casting Russian actors in top-level roles, with bits of Russian to add authenticity.

The Offering

Investment

Investment type: Class B Nonvoting Membership Units


$100 per Class B Nonvoting Capital Unit | When you invest you are betting the company’s future value will exceed $1.1M.


For investors, all of the adjusted gross profits* go to you first, before any producers, actors, director, etc, see any returns. 


Once every investor, classified as those holding Class B Nonvoting Capital Units, has been paid back 115% of their investment, then all net profits will be divided into two profit pools, each equal to 50%. One pool will be for investors to share pro-rata, pari passu with all other investors against the full budget of the film. The other pool will go to the producers (actors, director, writer, etc.).


This type of revenue sharing of profit occurs in perpetuity. Potentially allowing returns for the next 20 or 30 years, or beyond. 


Minimum Investment: $100

Security Type: Class B Nonvoting Membership Units
Round Size: Min: $10,000; Max: $1,070,000
Pre-Recoupment: Investors will retain 100% of the Company’s ("Karaganda, LLC") adjusted gross profits* up to the repayment amount of 100% of their investment, plus an additional 15% bonus, then a prorated share of 50% of remaining (net) profits.

After Recoupment: Any profit after the recoupment+15% will be shared 50%/50% between Class A and Class B membership units.

Pre-Money Valuation: $100,000

    

*gross profits allocated subject to terms of Karaganda, LLC Operating Agreement attached as an Exhibit to the Offering Document below.


If the film raises between $250k and $476k in total equity, the feature will be new footage and reused footage from the 26 min. short including outtakes, with the original cast that appeared in the short. This version will be 1/3 Russian and 2/3 English and shot 95% in New York, with 5% in Los Angeles. This film will not be commercially available, and solely available on the festival circuit.


If the film raises between $476k and $699,999the feature will consist of new footage and the original cast from the short. This version will be 1/3 Russian and 2/3 English and be shot 20% in Los Angeles and 80% in New York. This version will be commercially available, but will have a scaled-back production. We estimate the production quality will be the same as the AFI thesis short, but in color. 


If the film raises between $700k and $1 million, the feature will be the same as above, but without cuts to the screenplay and a Hollywood-level production value.


If the film raises more than $1 million in equity, we will aim for a total budget of $2.5 million with the difference coming from financing through state tax incentives and pre-sales. The feature will consist of new footage only and include the original cast, albeit in different roles. We will target known A-list actors for several of the lead parts. This version will be 90% in English, 10% in Russian. The plan is to shot in Georgia, USA to take advantage of state tax incentives. 


Perks*

"In capitalism, man exploits man. In socialism, it's the reverse." 

-Kamensky KARAGANDA

As an investor in KARAGANDA, you receive more than a share in the film's profit, but join a community of filmmakers and enjoy unique perks that you'll remember for a lifetime. Everyone who donates will be thanked in the film and added to the imdb page. For larger investors, we also offer the following perks and production credits on imdb. Each tier includes all those tiers below it.


Thank you credit: $100 or more. 


Karaganda tote bag: $500 or more.


Karaganda T-shirt: $500 or more.


Dinner with the director: $2,500 or more. You and a guest will be invited to a special dinner (paid for by the director) to discuss the project and anything else. 


Associate Producer: $10,000 or more. Inclusion in all plans for the making of Karaganda, and 1 trip to the set at your own expense. 


Featured Extra (does not include travel expenses): $20,000 or more. 


Co-producer: $25,000 or more. This includes one set visit, an invitation to all events, name in end credits and marketing materials.


Executive Producer: $50,000 or more. This includes unlimited set visits, an invitation to all events, name in main credits and marketing materials. 


A line of dialogue in the film: $200,000 or more. Limit 2. You will be required to attend all rehearsals and shooting at your own expense. You will be paid according to SAG-AFTRA rates.


If you would like a different reward, please let us know! 

$100 or more.


Thank you credit

Invest

$500 or more.


Karaganda tote bag + Karaganda T-shirt

Invest

$2,500 or more.


Dinner with the director: You and a guest will be invited to a special dinner (paid for by the director) to discuss the project and anything else.

Invest

$10,000 or more.


Associate Producer: Inclusion in all plans for the making of Karaganda, and 1 trip to the set at your own expense.

Invest

$20,000 or more.


Featured Extra: (does not include travel expenses)

Invest

$25,000 or more.


Co-producer: This includes one set visit, an invitation to all events, name in end credits and marketing materials.

Invest

$50,000 or more.


Executive Producer: This includes unlimited set visits, an invitation to all events, name in main credits and marketing materials.

Invest

$200,000 or more.


Dialogue in the film: Limit 2. You'll be required to attend all rehearsals and shooting at your own expense and be paid according to SAG-AFTRA rates

Invest

For details on the bonus, please see the Offering Summary below.

The Making of Karaganda, a Proof of Concept

In 2012, director Max Weissberg started work on a 26 min. excerpt of the feature script while a directing fellow at the American Film Institute in Hollywood, CA. (This student film was set up under a California DBA, "Losfilm", by Max Weissberg, separate from Karaganda, LLC.)


From the very beginning, the feasibility of the project was questioned by the AFI faculty and staff who labelled it "impossible." Max convinced his advisors to allow him to shoot KARAGANDA. With a 7-day shoot and a total budget of $65,000, the film faced many hurdles including a fight scene, Russian dialogue, and building a believable prison camp. Unfortunately, much of the film's budget went to off-screen expenses such as a water truck, a fire marshal, and a medic - all required by Film LA and AFI. Actors were also required by AFI to be under a SAG contract and either citizens or green card holders, yet another hurdle not ordinarily faced by independent films. 


The VFX shots of the camp and some additional blood work were completed by VFX artist Joseph Schultz, whose experience includes animating/designing for the James Cameron films ALIENS, TITANIC, and X-MEN 2 via 4-Ward Productions.


The film was completed in 2013. Watch the AFI short film here.


The film screened in these outlets

"Best Showcase Short" - Soho IFF
"Best Actor" - Charleston IFF
"Finalist" - A Film for Peace (Italy)
"Honorable Mention" - Santa Fe FF
"Honorable Mention ICA" - Dances With Films
"Top 5" Jury Selection - AFI Conservatory Showcase
Official Selection - Cinema Jove (Spain)

Official Selection - Skena Up (Kosovo)
Official Selection - ContraVision FF (Germany)
Official Selection - Shorts at Midnight (Germany)
Official Selection - In the Palace (Bulgaria)
Official Selection - Montreal World FF (Canada)
Official Selection - Cergy-Pontoise FF (France)
Official Selection - Hollyshorts
Official Selection - Cinegear Film Expo

Official Selection - Belize IFF (Belize)
Official Selection - Indianapolis IFF
Official Selection - Viewster FF
Official Selection - Lucerne IFF Showcase (Switzerland)
Official Selection - Boston IFF
Official Selection - Shortax (Russia)
Official Selection - Asia TV USA / ZEE TV (India/UK/USA)
Official Selection - IndieFlix (USA)
Official Selection - 37ª Semana Internacional de Cine de Autor de Lugo (Spain)
Official Selection - Arizona State University Library
Official Selection - Imagine India Festival (Spain)
Official Selection - Pielagos en Corto Festival (Spain))

Official Selection - NTV (Russia/USA)

Official Selection - Manhattan Film Festival

The Plan

CLICK HERE FOR BUDGET ESTIMATE

With an equity raise of $250,000 - $476,000, we will combine the footage of the Karaganda short with new footage using the same actors. The script copyright was never forfeited by Max Weissberg, which is now property of Karaganda, LLC. (Note that the original short film was not produced by Karaganda, LLC, but by a separate entity: California DBA "Losfilm," with its rights managed by AFI.) This film will be available as a festival film and a representation of what the final film will be. Because the new footage will take place in New York a few years later, the color/B&W combination will make sense given that the prison camp scenes are a flashback.


To make this film a commercial release we would need to fulfill the original deferred compensation of the SAG contracts for the AFI short. This amount is $145,598.04. To reshoot the entire short film under a new SAG-AFTRA contract would be approximately $80,000 at the same production standards. Of course, we will only use the short footage when we are unable to raise $476k or more in total. 


Some of the actors from the short (Konstantin Lavysh & Vera Cherny) have since appeared on the hit show THE AMERICANS. Thus we believe this film generate enough interest to continue raising money as it nears completion. 


Whatever we raise will be put first towards the production of the film  on location in Brighton Beach, with a few VFX-oriented scenes in Los Angeles County. Our state tax benefit (30% below-the-line in NY) will pay the $57,400 for VFX, a sound mix, and licenses necessary to finish the film. This film will be approximately 30% in Russian, and 70% in English. The minimum production budget necessary for this tier is $297k, with an overall budget of $396k (including production + post production) for 28 days of shooting. The film will fall under the SAG-AFTRA modified Low Budget Agreement for actors.

With an equity raise of $700,000 to $1 million, we will reshoot the entire film using many of the same locations in the short (in L.A. county), as well as on location in Brighton Beach. We will also use the same actors as in the short. With this money, we will build a much larger outdoor set than the short and spend more money on costumes and extras. We will also be able to get better locations and have more time to shoot the scenes, exponentially raising the quality. In such a scenario, we believe Netflix or Amazon would be the most likely distribution outlet as we have relationships with them. Also, we would avoid spending anything to market the film in this scenario. This film will be approximately 30% in Russian and 70% in English. The minimum production budget necessary for this tier is $632k, with an overall budget of $768k. This will be shot at the SAG-AFTRA low budget agreement.

CLICK HERE FOR BUDGET ESTIMATE

CLICK HERE FOR BUDGET

With a budget of $1+ million, we will take full advantage of the film's earning potential. With this amount, we will line up the remainder of our financing through industry partners that will help us bank our presales and state tax credits. Unlike the short, we will recast several of the lead parts with A-list actors who we think, based on the advice of our sales agent, can guarantee our returns in overseas territories. We will also shoot in a state that has excellent tax benefits such as Georgia which amounts to 30% of the production spend. This will allow us to shoot the film for under $2.5 million which falls under the SAG-AFTRA low budget agreement. Thankfully this union agreement allows us to use both union and non-union talent, which will save us tremendously on extras. Because of this, in our opinion films under $2.5 million budgets have the most bang-for-the-buck. In such a scenario, we will divvy up the territories to increase revenue. This film will be approximately 10% in Russian and 90% in English to further maximize global revenue. 

Distribution

Our previous content (for non related entities) has been distributed on the following outlets

About Us

Our Previous Work (Selected)

Generation Iron (2013)

Narrated by Mickey Rourke, featuring Arnold Schwarzenegger and Lou Ferrigno. Among the top 5 highest grossing documentary films of 2013, this film now screens on Netflix. It has spawned 2 sequels, both on Netflix which were financed by Netflix. 

Hotel Gramercy Park (2008)

Featuring Kanye West, Winona Ryder, Ben Stiller, Jared Leto, Mischa Barton, Marc Jacobs, Karl Lagerfeld, and Paris Hilton, the film premiered at the 2008 Tribeca Film Festival where it earned a jury citation. The film later screened on Sundance Channel for 5 years. Max Weissberg co-produced and appeared in this film.

Summertime In New York (2011)

Made for only $55k, this film screened in several festivals including SXSW (as "Room 4 Rent") and earned "Best Screenplay" award at First Time Fest. The film has now screened on over a dozen VOD outlets in several countries including China, U.K., Malaysia, Germany, France, and Japan.

Jeremy Scott (2015)

Featuring Katy Perry, Miley Cyrus, ASAP Rocky, and Rita Ora. This film opened in more than 400 theaters and currently screens on Netflix

Director's Statement

I have always been a lover of all things Russian. For me, there is something about its music, literature, history, and even the superstitions that I find fascinating. When I listen to Russian composers like Prokofiev or Rimsky-Korsakov, I feel powerful emotions.  And I know there is a depth – a spirituality – behind what I am listening to.


Fast-forward many years and many Russian classes later. The first draft of KARAGANDA came while living in St. Petersburg, Russia in 2004 as I studied at Herzen University and worked at LenFilm Studios. Just as I was about to start my second semester, my sister Nicole disappeared in the tsunami in Thailand. This was an extremely difficult emotional moment for me. In that weird way our sub-conscious speaks with us, I heard a voice asking me what it would be worth to have my sister back. I wondered how many strangers’ lives I would trade to have one life back that meant something to me personally. I was willing to do anything at that moment, and my desire was not governed by any belief in right and wrong.

 

As I continued to write the script – I realized what values I wanted to juxtapose within the main character. I suddenly saw the hero, Vladimir, as someone willing to do anything to save the one he loved, no matter how evil. Love vs. goodness became a central theme of KARAGANDA. As it turned out, and there was no better world to find these values in conflict with each other than in the life of a Russian gangster.

 

In 2013, KARAGANDA (26 min., B&W) was realized as an AFI thesis film, overcoming budget, production, and scheduling issues to make a film with Hollywood-level action and VFX. The awards and festival success made a feature version inevitable.


www.luftmenschfilms.com

Estimated Returns

Our sales company, Moonrise Pictures, has made sales estimates which give us strong reason to believe the film will be profitable at a budget of $2.5 million.


A budget of less than $1 million with a non A-list cast is worth considerably less in the international market. With the rise of streaming services, however, we are able to distribute the film widely with little cost. Given that there are Russian people in nearly every market and that the Russian mafia is widespread, we think audiences everywhere will appreciate an authentic rendering of this dark world. 


Thankfully director Max Weissberg has years of marketing experience as a social producer/editor at TV Land and the Paramount Network (Viacom), generating millions of online views with his content.

FAQ

Do you have a brochure I can read?

Yes. It's available here.


What happens if you raise less than $250k?

If we are not able to raise the full $250k through crowdfunding, we will evaluate additional sources of capital to help us reach the minimum budget.  If we find a suitable source, we may continue with the production.  Otherwise, we may cancel the offering and return committed funds. We estimate that the bare-minimum amount to complete production is $297k. Our goal is $250k because we are confident we can raise the gap through friends and family. Because of Start Engine's rules, or in the event we are able to receive funding or a loan outside of Start Engine, we have set our minimum at $10,000.


When are you planning to shoot?

Once we reach $250k, we will assess our rate of progress. If we do not feel we can ever achieve the $1 million in a realistic timeline (6 months), we will fix our budget at the lower amount. From the point we stop funding, we need 4 months until we begin production.

If we feel we can raise $1 million based on our rate of progress, we will continue until we raise this amount. Once we have this amount, our production start will depend on the lead actor's schedule. From our talks with their agents, this will be within 6 months of our raise. 

Do you have skin in the game?

Max Weissberg has already invested approximately $40,000 towards the development and production of both the short and feature film. He does not have much more in savings (and supports a wife and child), but will gladly put his last dime into the project. He also does not receive a salary until $1 million is raised, nor do the producers. 


Who are your actors going to be if you raise $1 million?

We, unfortunately, can't reveal this information. There are 3 actors agents we've spoken to and shared our marketing materials. 2 gave us very positive responses. 1 gave us a lukewarm response. Nevertheless, we think we can land an A-list actor. If we don't get our first choice, we don't want other actors to know they were our second. This casting information will be shared with any investor above the $10,000 amount, after the offering has closed.


Can I read the script?

Yes. Unlike many other crowdfunding ventures, we want you to read the script and see for yourself. It's available here.




How come your budget is a range, and not a fixed amount?

Max Weissberg has worked with crews that range from 8 people to 50 people. More money means more personnel, bigger sets, more shooting time. Our budgets are devised around the SAG union tiers: under $700k and under $2.5 million. Each bump up becomes more expensive to hire actors and the rules become more restrictive. The more we raise, however, the more we can increase the film's quality. 


How can you make action scenes and VFX on such a small budget?

For the AFI thesis short, our fight scenes were relatively easy to accomplish from a production standpoint. The actors worked with a fight choreographer, and the camera cuts and angles made it look realistic. A knowledgeable staff makes all the difference in time and quality. 

As for our VFX, we are blessed with having Joseph Schultz who has worked on X-MEN 2, TITANIC, ALIENS, and many other action films via the famous animation house 4 Ward Productions. Mr. Schultz loves the project so much he has donated money to the film. 


In the Press

Young American Director Makes a Film About the Vors and the Gulag
January 1, 2013

A Russian article in a NY based monthly magazine that came out after Max Weissberg's film VOR V ZAKONYE and before shooting KARAGANDA.

Karaganda: A Hollywood Director Introduces Russian Culture to Americans
January 12, 2017

A Russian article summarizing the feature project and Max Weissberg's desire to promote Russian culture.

Karaganda: A New Film is Being Made About Prison Camps.
January 17, 2017

A Russian article summarizing the feature project and about the AFI short film.

Interview in Russian with NTV: Persona Grata
June 1, 2016

Interview in Russian with the director for Russian NTV channel.

Offering Summary

Maximum 10,700* units of Class B Nonvoting Capital Units ($1,070,000)

*Maximum subject to adjustment for bonus units. See 10% Bonus below

Minimum 100 units of Class B Nonvoting Capital Units ($10,000)


Company
Karaganda, LLC
 

Corporate Address
2618 San Miguel Drive Suite 496 Newport Beach CA 92660
 

Description of Business
Production of feature film, KARAGANDA.
 

Type of Security Offered
Class B Nonvoting Units
 
Purchase Price of Security Offered
$100
 

Minimum Investment Amount (per investor) 
$100











Perks*

Each tier includes all those tiers below it.

Thank you credit: $100 or more. 

Karaganda tote bag: $500 or more.

Karaganda T-shirt: $500 or more.

Dinner with the director: $2,500 or more. You and a guest will be invited to a special dinner (paid by the director) to discuss the project and anything else on your mind. 

Associate Producer: $10,000 or more. Inclusion in all plans for the making of Karaganda, and 1 trip to the set at your own expense. 

Featured Extra (does not include travel expenses): $20,000 or more. 

Co-producer: $25,000 or more. This includes one set visit, an invitation to all events, name in end credits and marketing materials.

Executive Producer: $50,000 or more. This includes unlimited set visits, an invitation to all events, name in main credits and marketing materials. 

A line of dialogue in the film: $200,000 or more. Limit 2. You will be required to attend all rehearsals and shooting at your own expense. You will be paid according to SAG rates. 

*All perks occur after the offering is completed.


The 10% Bonus for StartEngine Shareholders

Karaganda, LLC will offer 10% additional bonus units for all investments that are committed, within 24 hours of this offering going live, by StartEngine Crowdfunding Inc. shareholders who invested over  $1,000 in the StartEngine Reg A offering which closed earlier this year.

StartEngine shareholders who invested $1,000 or more in that StartEngine Reg A offering will receive a 10% bonus on this offering within a 24-hour window of this offering’s launch date.  This means you will receive a bonus for any units you purchase.  For example, if you buy 10 Class B Nonvoting Units at $100 / unit, you will receive 11 Class B Nonvoting Units, meaning you'll own 11 units for $1,000.   Fractional units will not be distributed and share bonuses will be determined by rounding down to the nearest whole share.

This 10% bonus is only valid for one year from the time StartEngine Crowdfunding Inc. investors received their countersigned StartEngine Crowdfunding Inc. subscription agreement.

Irregular Use of Proceeds

The Company will not incur any irregular use of proceeds.

Show More
Most recent fiscal year-end:
Prior fiscal year-end:
Total Assets
$23,517.00 USD
$29,545.00 USD
Cash And Cash Equivalents
$23,517.00 USD
$9,431.00 USD
Accounts Receivable
$0.00 USD
$0.00 USD
Short Term Debt
$0.00 USD
$0.00 USD
Long Term Debt
$32,284.00 USD
$32,284.00 USD
Revenues And Sales
$0.00 USD
$0.00 USD
Costs Of Goods Sold
$0.00 USD
$0.00 USD
Taxes Paid
$0.00 USD
$800.00 USD
Net Income
-$5,833.00 USD
-$2,739.00 USD

Risks

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.


Updates

Notice of Funds Disbursement

13 days ago

[The following is an automated notice from the StartEngine team].

Hello!

As you might know, Karaganda has exceeded its minimum funding goal. When a company reaches its minimum on StartEngine, it's about to begin withdrawing funds. If you invested in Karaganda be on the lookout for an email that describes more about the disbursement process.


This campaign will continue to accept investments until its indicated closing date.


Thanks for funding the future.

-StartEngine

The Road to $1 Million, Title Contest, and Our Distribution Plan

17 days ago

Thanks to you we have reached over $130k on Startengine and have hit our minimum to greenlight the film!

THE ROAD TO $1 MILLION

Our previous update focused on how we would shoot Karaganda based on the amount currently raised. While we are confident that we can make an excellent film at that budget level, we still benefit from raising more money to hire some name actors. Name actors are expensive, but can magnify the value of the film when released.

We recently spoke with the director/producer, David Jay Willis, behind the campaign “That Christmas Movie” which launched on Startengine in 2017 and ultimately earned $1M via crowdfunding. His advice was different than what we received in the past from other crowdfunding campaigns, and we are ready to embrace it. It will take us a month to see the kind of results he generated. In the meantime, we have paused our Facebook marketing campaign to save money while we create new videos and approach investment influencers.

NAME THAT FILM CONTEST

While we like the title “Karaganda”, we think we can perhaps do better. So we’d like to see if you had any ideas – or prefer some other titles that we’ve come up with. If we end up using your idea we’ll give you 1 extra share and a free ticket to all our events. But please be honest because a good title will affect the return on your investment. Remember, you should assume that anyone hearing our title will initially know nothing about the content of our film.

Please visit: https://www.surveymonkey.com/r/L8HK3SP

THE DISTRIBUTION PLAN FOR KARAGANDA

After we have our package and a start date, we will first try to close a domestic pre-sale on the film. Our team (Edwin especially) has done this before successfully with the likes of Netflix, Hulu, Starz/Lionsgate, and a few others. We could potentially leverage a deal like a Netflix + a P/A (“prints and advertising”) fund for a theatrical release to help make this happen. Many of the streaming outlets offer a “cable” deal (2-3 year exclusive pay tv window) which would be our 2nd or 3rd window of revenue after we exercise our VOD (itunes, google play, etc.) sales and/or theatrical. Depending on the circumstances, a theatrical release may or may not be very profitable, but the associated marketing and press will increase the value of the other revenue windows. From our experience, profitable is achieved by or during the "cable" rights window.

We will next go after some international pre-sales on the film once our package is in place. Specifically for CIS, UK, Brazil, Australia/NZ and Germany. This will be done via our foreign sales agent.

If we elect not to get a domestic pre-sale (because we feel we can garner a better sale via bidding at a festival based on the pre-sale offers), we would then do a finished film sale via festivals and planned screenings, but still try to leverage a P/A fund. In addition, here is a full list of the distributors who we can have involved in distribution once financing is in place or once the film is finished, based on our previous experience:
• Netflix
• Hulu
• Starz/Lionsgate
• Amazon
• HBO

Bifurcating the film rights involves more effort, but it will return the most profit to investors and take advantage of our pre-existing relationships. In a worse case scenario with insufficient money for any name actors, we still will be able to take full advantage of each revenue window to achieve profit from the film, relying on our marketing ability and direct relationships with distributors.

WHAT WE LIKELY WON’T DO: THE “STUDIO DEAL”

The most famous kind of film distribution model is when a studio like Paramount, Universal, Warner Bros., Sony (Columbia), Disney, etc. integrates the film in its sophisticated distribution network across the globe. Studios also can afford large amounts of money to turn a film into a “blockbuster.” This marketing is multi-faceted and can even include tying in TV shows and branded content (a big focus of Max Weissberg’s employer ViacomCBS which owns Paramount).

Most of these films come out of the studio’s first-look deals with producers (who get their expenses paid plus studio offices for the first opportunity to distribute their films). But studios also acquire independent films to distribute. The most famous of these was Paranormal Activity (budget: $11,000) that was spotted at a film festival, reedited, and distributed by Paramount earning $193 million worldwide. Many “studio” films are not really made by the studios at all but are simply distributed by them.

These studio deals given to independents are akin to buyouts for immediate profit, with a points system that pays royalties to the rights holders. The definition of studio “profit” for these points can run 50 or more pages using opaque formulas, but even so many still earn money for years. A friend/classmate from AFI recently directed a kids-focused film with a budget of $400k. It sold for a profit to Sony (with a points payment system), but will not have a theatrical release. Another filmmaker friend recently produced a film independently with multiple A-list actors for around $5 million that also sold to Sony and is in theaters now. Both projects decided that this deal was best for them because they wanted their money back immediately, even if they may not earn as much overall in the future. They also did not have to spend more money to market the film. The point is that studios take films big and small if they think they can earn money from it, and this happens regularly despite what many might assume.

While we’d love to brag that a studio is distributing our film, we care most about investor returns and it’s very unlikely we’ll take this route. There can be no telling what these offers will be and what will be best given the circumstances, however. But the goal will always be to earn as much money as possible for investors rather than trying to enhance our reputations.

Production Notes

27 days ago

Thanks again to our investors who have kept our momentum steady since our greenlight announcement. We wanted to spend the next few updates talking about our plans both on the production and distribution side. Because we are three producers instead of one, it takes time for all of us to share our opinions with each other.  Also, and crucially, we don’t believe in making decisions until we are forced to. We hope that the faith put in us from our investors stems from our previous experience and our proof-of-concept, which was made in far more difficult circumstances than we will face for our feature (namely – the endless restrictions put in place by the American Film Institute). But if our plans change, don’t be alarmed. We are big-minded enough to change our minds and admit a mistake when new, more accurate information is presented.

That being said, we are still very much actively forming plans. Some background for our new investors: Our team has more than 14 feature films between us. We also produced a feature film in 2009 with a minuscule production budget of $45k (with over 30 production days). This film was successfully distributed, earned money, and still returns 4% a year even 10 years after production. Trailer: So we are not worried about making a quality film at a low cost. The issue is that we want to make a very high-quality film that will return a significant profit to investors and our producers pool. Recall that investors get paid 115% of their investment back before we do. This also partly explains why we are continuing to raise money. More money will help us fill roles with name actors that will magnify our earnings.

Because of our budget situation (at this point), we will need to shoot 75% of the film in New York to get their tax rebate of 30%-40%. (The percentage fluctuates based on which county the cost is generated and the overall budget level). New York offers a production bonus to shoot upstate, and we found a sound stage near Woodstock, NY that is cheap and perfect for our needs (also managed by a friend). In the area are numerous small airports around that are suitable for some of the shoot days, as well as a cockpit set. Since a large chunk of the film takes place in Brighton Beach, we can shoot in that area using actual Russian bars/night clubs. The nice thing about shooting in NY vs. LA is that business owners in NY are often willing to accept zero or small amounts of money ($100-$400 per day) because they are excited by filmmaking and have never been asked previously. In LA, it’s the opposite situation. Locations are constantly being asked and would never think of sacrificing business hours to a film shoot. Ditto for extras. For the feature SUMMERTIME IN NEW YORK, we were able to secure a large location for free which we filled with 100+ extras who came for pizza and free beer provided by a sponsor, Colt 45. (If you like pizza & beer and could pass for a mafioso – please let us know so we can contact you when the shoot comes. Per our investor perks, we will always feature our bigger investors more prominently.)

We may still shoot a few days in LA County because the rustic exteriors there have a more exotic look than in New York, and in that case we will simply reuse locations in Santa Clarita, CA from the short. (Our mantra for the look of our prison camp exterior is that it should make one think of “death” -  a sense that escape is pointless.) A line producer/location manager we’ve spoken with, Mandy Ward, has promised us that all our locations can be found in the NY area. We’ll update after a scout once that is confirmed. So far we have no concerns about the prop and costume houses in the NY area. Every bit of new information is beating our own very cautious expectations.

As for start time, we benefit most from shooting in January or February because it will look more "dead" for our purposes. And props, wardrobe, camera gear, and crew will be cheaper then. A big mistake a lot of films make (and which we will avoid) is in hiring too many crew. No doubt all of our investors have passed by a film set and seen a large number of people sitting around. More people means more administration and more mouths to feed. I (the director Max Weissberg) have directed on sets of 60+ crew (under union rules) and sets of 8 non-union crew. Surprisingly, 8-10 crew is often best, except when you are on a sound stage and need to frequently rotate sets.

When people aren’t working on a set, they need someone to talk to, somewhere to go and eat (e.g., catering tent), parking, and a place to be held when not working. A core crew of 9 people consists of a director, 1 Dir of Photographer, 1 Gaffer (or 2 Dir of Photographers a la “Summertime in New York), 1st Asst Camera, 2nd Asst Camera, hair/makeup artist, Sound boom/mixer, Producer/Location Manager, and a Prod Asst/Script Supervisor. I can confidently state that the following jobs are not essential for every single shoot day: 1st Asst Director, 2nd Asst Director, sound mixer, 2nd 2nd AD, caterer, grip, unit production manager, VFX supervisor, stunt men, best boy, swing, costumer, hair, production designer, art director, and any unnecessary PAs. These people can actually make things go slower, because instead of doing what is necessary to get the job done, it comes down to finding the responsible person - which takes time. Everyone complains about catering on sets. So why have a caterer? It’s often cheaper with more variety to carry a bag of snacks and order lunch delivered every day. I know this because I’ve done both. Or in the case of an AD, they can rush things simply because they want to wrap early and go home. Some jobs are only needed for prep. 

The most efficient method of production is to bring on crew like ADs, grips, gaffers, electricians, steadicams, extra camera operators, etc. only when needed and for that day or week only. From my experience, people work much harder when they have to prove themselves and are actually working, rather than when their job is guaranteed and aren’t working most of the time. When we have big spaces with large numbers of extras, or when we are on a sound stage where there is a lot of electrical/grip work, we will then and only then devote more money towards crew.

There are some caveats, however, because of the fake tattoos, 1990s period, and our sets. Our film will need at least 2 make-up artists to be on set every single day, with up to 2 more on many days. We will also need a costumer and production designer on most days. But still, this is much better than your typical wasteful crew. The easiest way to handle the change in personnel is to structure the shoot so people can be hired for at least a week before they are laid off. Most filmmakers have never tried filming the way mentioned above and are misled into thinking more people means higher quality. But having more shooting days is always preferable to more crew, in my opinion. Rest assured your money will not be wasted.

Another way we will cut costs is more obvious: by paying people less. A potential recession would help us recruit higher crew talent for the same amount of money. But even so, most crew jobs can be filled with competent people for $200, with the department heads getting $300 a day. One thing we will not do is get someone to work for free. This is actually an expensive thing to do because people who aren’t paid don’t want to work, still have to be fed, take up time to be trained and instructed, and usually leave halfway through the production. Every single person behind the camera will earn at least minimum wage and be treated with full respect. We also don’t want to break the law and be liable.

When it comes to post-production, we can do even more cost-cutting. Depending on how much we raise, we can handle all the post ourselves excluding the final sound mix and some VFX work. (An example of a recent Paramount Network commercial in which all VFX and editing was completed solely by me, Max Weissberg:  

Thanks to my day job, we have access to some resources from Viacom Media Networks including color and sound mixing facilities. But ideally we would want to at least bring in an editor or editing consultant to get the most perspective out of the footage. The NY tax rebate will help us, at a minimum, pay for the more sophisticated VFX and music licensing/composing. (Note that the actors’ salaries are not part of the tax rebate in NY).

Following the rough cut, we will have some focus group screenings. Then there will be a reshoot. Our short film Karaganda had a reshoot day which was budgeted and scheduled long before we ever began the main shoot. We thought at times of cancelling the reshoot to save money (after our principal shoot).  But in the end we chose to reshoot a scene for performance purposes and it significantly helped the final film. Often it seems in the media that a reshoot on a film meant people screwed up big time. But everyone screws up, so why not make a plan that takes into account some level of error? We’d rather have a reshoot day than hiring a PA to run and get coffee every day.

Please stay tuned for more updates regarding our distribution and marketing strategy as well as answering any questions you might have. Thank you again for your investment!

Notice of Material Change in Offering

30 days ago

[The following is an automated notice from the StartEngine team].

Hello! Recently, a change was made to the Karaganda offering. Here's an excerpt describing the specifics of the change:


Extended length of campaign.


When live offerings undergo changes like these on StartEngine, the SEC requires that certain investments be reconfirmed. If your investment requires reconfirmation, you will be contacted by StartEngine via email with further instructions.

Karaganda is GREENLIT

about 1 month ago

We are excited to announce that we are finally disbursing the money in full confidence that we will produce the feature film KARAGANDA. We were able to achieve this milestone after one of our investors guaranteed to finance the gap in our budget between what we raise on Startengine and the amount we need to begin shooting, if we are unable to do so otherwise. (There is also $60k of money committed outside of Startengine that is a hard amount.) As this investor has already committed a significant amount, we will plan to continue our raise for the time being so as to close that gap and hopefully exceed it.

For those who have been closely watching our amount and investor numbers, money has flown in and out of our project presumably as investors became anxious if this film will ever be made. Needless to say, it was less efficient to have our marketing dollars go to waste by not disbursing the money from new investors as we went – but we wanted to maintain our integrity and avoid a situation where we accepted investor money, but were unable to produce the film. Rest assured we will not have to deal with these fluctuations in the future.

There is a LOT more we want to say in regards to the production, estimated returns, and the IP which has gone up in value due to factors having nothing to do with our Startengine raise. We plan to have several more updates in the next week to dig more deeply into these topics. For the time being, take comfort in the fact that you are now part of something your grandchildren will one day quiz you about.


Notice of Funds Disbursement

about 1 month ago

[The following is an automated notice from the StartEngine team].

Hello!

As you might know, Karaganda has exceeded its minimum funding goal. When a company reaches its minimum on StartEngine, it's about to begin withdrawing funds. If you invested in Karaganda be on the lookout for an email that describes more about the disbursement process.


This campaign will continue to accept investments until its indicated closing date.


Thanks for funding the future.

-StartEngine

Where It All Began

about 2 months ago

PROGRESS ON FUNDING

Because of our decision to raise a minimum before disbursing the money raised, we have seen the amount of investors tick up and down. Do not be alarmed, the amount committed to production does not always reflect this figure. In addition to our marketing efforts, we are having conversations with people outside of Startengine. At this moment, we are $83k away from reaching our minimum to greenlight. This is still a significant amount. But consider that many of our investors on Startengine have privately told us they will invest substantially more if we are close to our goal. We encourage you to invest that money now so we can more quickly greenlight the film, which will bring in more investors. Once our total commitments are enough to make the film, we will disburse the money.

Our campaign now has 329 followers, only a third of whom have invested. The rest are “sitting on the fence.” We understand their concern and wish to keep our integrity by being upfront with investors. We want to make a film only in the conditions that we know will earn a profit to our investors.

WHERE IT ALL BEGAN

Before the making of KARAGANDA, Max Weissberg directed a film at the American Film Institute, VOR V ZAKONYE (THIEF IN LAW), set in the same world, starring Nikita Bogolyubov and Konstantin Lavysh. The two characters play the future son-in-law of Vladimir (who was once imprisoned in Karaganda), and Vladimir’s son, Marat. This film can be seen here: https://vimeo.com/40561488


The budget of this film was $4,000. Because we had no money and could not pay our actors, one actor had another (paying) shoot in San Diego for 2 of the 3 days! Thus, we were forced to employ “block shooting” in which we shot scenes without all the actors present. Yet the film still holds its ground against other shorts. This no-budget film shows our ability to produce strong work at zero cost. Hopefully it will demonstrate that our team is capable of incredible feats with minimal resources. Hence, we are not worried about completing KARAGANDA with a limited budget. If you haven’t already, please check out the short version of KARAGANDA: https://vimeo.com/76029202

While not the central focus of Karaganda, LLC, the story of VOR V ZAKONYE (the sequel to KARAGANDA) could be a valuable piece IP to Karaganda, LLC in the future and is included in the investment.

RECONFIRM YOUR INVESTMENT

3 months ago

RECONFIRM YOUR INVESTMENT

As you’ve noticed from your email inboxes, we at team Karaganda decided to renew the offering for 60 more days. The results from the investor event are starting to kick in, and we’ve seen an uptick to surpass $80,000. We have also received commitments to bring us within reach of $100,000 in the next week, and a pledged amount of another $25,000 by the end of next month. Of course, we are speaking to many more potential investors and expect to receive more commitments soon. Please bear with us.

We recently were asked if we could lower the budget amount (below the $250k greenlight threshold) so as to make the film sooner. There are two aspects to this: whether we could make the film at a lower budget amount, and whether that makes sense to investors.

For us, we know we can deliver a high production quality without spending much money. In 2009, (well before Max attended the American Film Institute and made the short for Karaganda), he shot an ultra-low budget film, SUMMERTIME IN NEW YORK at a total budget (production + post) of $55,000. This film had a skeleton crew, non-union actors, and a shooting schedule of 32 days. Everyone who worked on the film was paid and this romantic comedy has since delivered to more than 25 VOD platforms around the world, including in China, Japan, Germany, the UK, France, etc.

The trailer is here: https://www.luftmenschfilms.com/summertimeinnewyork

The full film is here: https://tubitv.com/movies/293108/summertime_in_new_york

Among the festivals where SUMMERTIME IN NEW YORK screened was First Time Fest. The filmmakers, its cast, and its backers were invited to a series of catered events held in the historic Players Club, which Martin Scorsese, Darren Aronofsky, Sofia Coppola, Phillip Seymour Hoffman, Tony Bennett, and Michael Shannon attended. As the festival was small, people were easy to meet and the film won an award. Max even snapped a photo with Scorsese (note that this was the same room where our Karaganda investor event was held).

Despite the perks resulting from this no-budget feature, its worldwide earnings could never match an action or horror film despite its wide distribution. Anyone who attends the American Film Market or Cannes will quickly realize that action films almost always sell better internationally than romantic comedies. No surprise they tend to be more difficult to make: often requiring more actors, exotic sets, VFX, and a longer shooting schedule. For Karaganda, we also want to hire SAG-AFTRA actors who have at least been on major TV shows, if not acclaimed feature films. So we need to stick to our plan for Karaganda and not error on the side of expediency.

Our team’s experience in producing feature films over the last few years that have been distributed in theaters, TV, SVOD, and elsewhere has taught us the necessary ingredients required to make a profitable film, even at a lower budget. The fact that we can do this for Karaganda at the amount proposed gives our investors a tremendous upside. We also expect the perks for our investors (e.g., invitations to star-studded events) to be likely greater than with previous productions because of the quality increase.

If we settle now and attempt a bare bones production without the elements we need (a la SUMMERTIME IN NEW YORK), it would be at a disservice to our investors who expect not only quality but also a substantial return on their investment. The waiting game is difficult and this campaign has not been easy. But we believe that anyone who invests with Karaganda will not only see their returns back but will one day be showing their grandchildren the film.

Please stay tuned for more updates and please be sure to reconfirm your investment!  

Notice of Material Change in Offering

3 months ago

[The following is an automated notice from the StartEngine team].

Hello! Recently, a change was made to the Karaganda offering. Here's an excerpt describing the specifics of the change:


Extended length of campaign.


When live offerings undergo changes like these on StartEngine, the SEC requires that certain investments be reconfirmed. If your investment requires reconfirmation, you will be contacted by StartEngine via email with further instructions.

100 INVESTORS

3 months ago

100 INVESTORS

We are excited to announce Karaganda now has 100 investors!

Karaganda investors come from all over the USA and in several places around the world (see USA map below). We think this also indicates how the film will be received. People are excited for the Russian-mafia equivalent of the Godfather!

PLAYERS CLUB EVENT

On June 19th, Karaganda investors met at the Players Club to get a tour of Gramercy Park and a presentation. Thankfully there was no rain during the tour. Investors entered the private park located in the center of Manhattan, the keys for which are only available to residents of the neighborhood. Max’s tour told the stories of former residents, Bob Dylan photo shoots, draft riots, and the homes of famous people. Among the stories was that of former resident Cyrus Field, who, after several dramatic successes and failures, succeeded in laying the first transatlantic cable.

Later the group gathered at the library of the Players Club and listened to a short presentation, with Max, Edwin, and Nina present, followed by questions. The good news is that people were easily convinced of the merits of the project. We are currently discussing larger investments with some of these people and should see some results shortly.


FACEBOOK ADS

We are happy to report that our campaign has improved the optimization for our marketing efforts. Because raising investment funds for a film is so new, we struggled to learn how optimize our campaign and took a lot of advice – not all of it helpful. We have since noticed that, based on the data, we had far more investors in March than in April and May. Unfortunately because we had unknowingly lowered our bid for ad auctions in April and May (even while spending the same amount), we had fewer results. After speaking with a more experienced Facebook consultant from Facebook, we realized this mistake.

At present we are actually spending roughly half of what we previously spent per month and are getting a lot more results. Welcome new investors from Facebook!

CAMPAIGN RENEWAL? 

Per SEC regulations, we are not allowed to announce any renewal prior to filing. Stay tuned!

Karaganda Event in 2 Weeks / Karaganda VFX

4 months ago

Our investor event will be in two weeks! If you would like to attend and haven't rsvp'd, please do so.


KARAGANDA VFX

As our offering page explains, we are fortunate to have Joseph J. Schultz as our VFX artist for KARAGANDA. He is formerly of 4-Ward Productions and has worked on films including TITANIC, X-MEN 2, TERMINATOR 2, and THE ABYSS. He also did some of the VFX for the original AFI short: 

Mr. Schultz also did some blood work for the film:

If you've read the screenplay, you will notice that we have scenes with helicopters and a large Soviet transport plane. You may wonder how this will be created. We can tell you that we will not be renting any helicopters or Soviet planes for the making of Karaganda! (We will need a cockpit set on a sound stage for the interiors, which are available in several places, however.) How is this possible? Thanks to the wonders of 3D graphics. We can actually even purchase pre-rendered planes and helicopters to use. Of course, Mr. Schultz often prefers to do things customary and we defer to his judgment.

Check out this crude video of helicopter VFX to get a sense of how easy one can create a realistic-looking helicopter using a 3D pre-render purchased online (note this was not made by team members of Karaganda, LLC and is only to demonstrate how VFX work) : 

Updates Re: Previous Updates

4 months ago

Thank you again for your support of Karaganda. We wanted to follow up on some announcements made in previous updates.

  • Our event will be Weds June 19th, 2019 at the Players Club in Gramercy Park NYC. We really want as many investors to be there as possible. Unfortunately because it costs us money to have the event and the open bar, we can’t invite every investor at every tier. If you will happen to be in town, please let us know!
  • Our talks with CAA continue. For those that don’t know, CAA is the #1 talent agency in Hollywood and is rated by imdbpro as the most powerful company in Hollywood. As it turns out, they are most eager to develop and package a television show about the Gramercy Park Hotel based on Max Weissberg’s Rolling Stone article. This process will help Karaganda LLC because it will give us increased access to talent. We cannot publicly reveal the actors’ names discussed, but we can say that this will all help our casting process when the time comes. It’s not easy to cut through the clutter in Hollywood, but it helps to have powerful brands behind you. Also, Max Weissberg is now repped by manager Abby Finer of Finer Entertainment.
  • Our producer Edwin recently met with Netflix to discuss the project. Netflix is unable to finance the film (no surprise to us based on our previous experience), but is very interested in the final product. As we mentioned, we expect to make a profit even at the lower budget levels by selling to a streamer thanks to Karaganda being a “genre” (action) film.
  • As noted before, if you’d like a copy of the script please let us know. Stay tuned for more!

Karaganda Investor Event 6/19/19

4 months ago

VIP Investor Event @ Players Club 6/19/19

4 months ago

We are excited to announce that our VIP investor event will be held Weds. 6/19/19 at the Players Club in Gramercy Park. While we received an incredible offer for our event from the Gramercy Park Hotel, we felt our investors would be better served in the more intimate environment that the Players Club offers.

Founded in 1888 by actor Edwin Booth (brother of Lincoln assassin John Wilkes Booth), members of the Players Club have included Mark Twain, James Cagney, Christopher Plummer, and more recently, Ethan Hawke and Jimmy Fallon. Max Weissberg is a former member of the club himself and was granted membership gratis in conjunction with an award for a film.

The event will begin at 6pm with a walking tour of Gramercy Park, one of the only private parks in New York. This tour will be one-of-a-kind as director Max Weissberg's family previously owned the Gramercy Park Hotel and he has his own bench in Gramercy Park. At 7pm, there will be a visual presentation about the film in the club's library, followed by cocktails and appetizers. 

After the event, guests are welcome to hang out, smoke a cigar on the club's balcony, play cards on Edwin Booth's card table, or play billiards with other club members. (One never knows who will drop by, as Max Weissberg met both Martin Scorsese and Darren Aronofsky on one occasion). As the evening draws to a close, we will take a nightcap at the Gramercy Park Hotel's Rose Bar. 

The event is free to Karaganda investors in good standing who have invested $500 or more. Investors who have invested $1000 or more are welcome to bring a guest. Eventbrite link: tinyurl.com/y4olw7ju 


Answers to Investor Questions - Script Giveaway

5 months ago

Please be sure to reconfirm your investment in Karaganda!


  • Where can I get a copy of the script?

It’s available here: tinyurl.com/y4g6fylz . For a limited time, all investors who have confirmed their investment and are in good standing by 4/25/19 can request a hard copy of the script mailed free of charge to their address. If you would like your script signed, please indicate so.

  • I saw something about investors in this offering getting priority payouts on any income. Can you explain a little more how that will work?

The “priority” refers to investors being paid profits ahead of the producers pool, AKA the class A members. As a class B investor, you are entitled to 115% of your investment before the producers share in the profits.

Please note that this structure is considerably different than most companies that publicly raise money, but is a standard structure for film investing as the only real asset of the company is its intellectual property (“IP”) and revenues therefrom.

At the lowest tier-budget ($396k), all of the money raised goes directly into the film, with the directors and producers and other above-the-line talent taking no fees during production nor any deferred payment, even though this will result in them not being to earn money elsewhere for a minimum of two months. In the event that we are short of the money to reach even this tier, we may have to borrow money or become indebted to crew members in the form of unpaid wages. There is also $12k in deferred payments for the script, both to Nina and Max, as a legal “consideration” to establish the chain of  title. As the film’s expenses evolve and production gets underway, these numbers will be reviewed by a CPA and released to investors.

At such a budget tier, our strategy will be to sell the movie outright upfront (a buyout) to repay investors. Based on our inside knowledge, the film will be profitable in this budget range once completed if sold on an all-rights, all-territories basis to a streamer.

At the middle budget tier of $768k, all of the money raised still goes directly into the film, with the directors and producers and other above-the-line talent taking no fees during production. There is deferred compensation, however, that is roughly $90k, which will allow us to hire people who can help us with the distribution and connect us to higher-level talent.

At this budget level, we will still aim to take a buyout upfront to repay investors. We expect our margin in this case to be higher, and consequently there will be more profit to investors even with the $90k in deferred payments.

At the ~$2.4M budget level, there is considerably more deferred income, as we will need industry partners to help with gap financing (the “gap” between raised equity and target budget). At this tier, there are $52,200 in wages to above-the-line talent (director + producer). This is so these individuals can allot more time and more of their own resources to the project. In any scenario, the total amount will still be under $2.5M to comply with the SAG-AFTRA low budget agreement.

This film will be sold on a territory-by-territory basis to maximize profits.

Note that typical medium and large budget film projects allocate 5% of the budget in fees to the director, and another 5% to the producers payable during production. Thus, in every scenario the budget for Karaganda is streamlined as much as possible to raise the production level, maximize transparency, and increase the returns to investors.

  • Is this film a scam?

Some people question whether anyone can make money in the film business, especially outside of Hollywood. Such suspicions are warranted because investors so often lose their money in film investments. As someone who is approached with low-budget film investment opportunities on a regular basis, I have yet to find a film other than my own that I personally would invest in. Statistically speaking, horror films have the best track record at lower budget amounts, and action/adventure films do best overall. Most lower-budget films tend to be coming-of-age dramedies, or other genres that are easier to make. They almost never have extensive fight scenes, detailed-looking custom sets, and Hollywood-level VFX. This has much to do with a common misconception: action films require huge amounts of money to produce. (Even my production mentors at AFI initially expressed the concern that we could produce our short with our SAG-AFTRA- mandated budget limitations.)

What makes Karaganda different from these other low-budget films is that it has already demonstrated its ability to create fight scenes, exotic sets, and VFX (as a proof-of-concept) at a near zero budget. This was only possible because of the level of talent both in front of and behind the camera. Films that are action/adventure and are high quality do well in foreign markets and can expect to earn 3x more overseas than in the U.S. That’s why action/adventure films that are well produced are solid investments.

Like the company Ferrari that can build a faster car than GM, quality is not strictly a function of resources. More important is the knowledge of the craft. This is especially true now that digital cameras have eliminated one of the most expensive parts of making a movie: buying and developing film.  Based on studies, the most consistent variable that predicts the potential profit of a film is who the director is.

 

  • I noticed I will be getting a K-1 each year. I really don’t want to mess with those for a lot of reasons. Any chance you will convert to a C Corp and just payout dividends each year?

I understand your concern about taxes, and we don’t enjoy dealing with this either. Please note that I am not an accountant, and that this answer is subject to change based on the recommendation of our CPA. Class B shareholders, according to the Karaganda operating agreement, do not own the actual LLC, but own the revenue rights to its principal asset, the film and its underlying IP, the script. Therefore we can issue payments in the form of a 1099. You may want to file a 1040 and declare this as a royalty payment. This 1099/K1 distinction makes no difference on the income side between owning the revenue rights or the LLC itself (since Class B is paid out first anyway). We copied this format from other corporations set up for film investment on Startengine. As for payments, I have used Square in the past to manage electronic payments to large numbers of people and digitally file the tax paperwork. We would like to repeat this for Karaganda, LLC. In the event we are forced to issue schedule Ks, or run into any other tax problems, we will convert to a C Corp. Like you, we want to minimize paperwork and we apologize for lack of clarity as having so many investors is new for us.

  • This is my first movie investment. Can I assume that we will own a piece of this movie forever or what is the normal life of this type of investment?

As described above, we would like to avoid the situation of having the payments go on forever at the lower budget levels by making an all-rights deal with a streamer. Films are in many ways unpredictable. They can make a lot of money upfront, and then go quiet. And suddenly rights will expire after 5 years and a new deal can be gotten elsewhere. Also, films can sometimes catch on in foreign territories and unexpectedly generate significant amounts of money well after their release. When China Mobile put Max’s film Summertime in New York on their system approximately 5 years after production via a rights manager aggregator, there was a significant revenue boost. This film with its tiny budget, would not have been able to launch theatrically in China, yet found an audience on people’s phones. Needless to say, we don’t want to sell phone streaming rights in China until we’ve maximized profits through more traditional distribution methods first. But without an upfront deal, expect to be receiving payments at least for 10 years if not more. We can’t answer this question definitively now because we don’t know what buyout offers the film will get.

  • You mentioned in your last update that you already have an idea for a sequel if all goes well. I assume that would be owned by another entity like this one but would we get any royalties or payments if a sequel gets made? Same question for a Netflix series or Broadway show How about the soundtrack album and other ancillary revenue sources?

It's entirely possible that the film’s IP will be bought out in preparation for a sequel or a series, and if that happens it will be paid out to investors. Because of legal issues, any large studio or production company would want the IP of the original film if making a sequel. I cannot say the likelihood of this situation happening, nor can I say what the amount would be. The LLC owns the script’s IP, however, not any one individual, so it would receive something in this scenario.

Excluding licensing of the film itself, I would not expect any ancillary revenue from the film in the form of a soundtrack or a Broadway show as this is very unlikely. A video game is a more likely scenario and worth far more, but still not likely overall. Revenue from screening on airlines is perhaps a better example of revenue that many investors are unfamiliar with, unlike pay tv and VOD outlets.

Another potential ancillary revenue stream is branded content, meaning we place advertising within the film or sell portions of the film for use in advertising. We have the connections to do this and have done this before, but the violent nature of the film may scare away potential sponsors. Also, unless we are at the top budget amount, it’s unlikely this revenue will be significant. But we will be able to maximize this potential revenue source should there be any opportunity. Whether the film will earn anything from branded content will be determined only after the film is produced.

Karaganda VIP Investor Event @ The Gramercy Park Hotel

5 months ago

In early June (date TBD), Karaganda LLC will host its first investor event in the legendary Gramercy Park Hotel. Guests will enjoy a short walking tour of Gramercy Park, the only private park in New York City, followed by drinks and appetizers.  

After a short break, Max Weissberg, director of Karaganda, will give a 30 minute presentation sharing photos and anecdotes from the hotel's history, leading up to the making of Karaganda. For over 40 years, Max's grandfather owned the hotel when it hosted rock n' roll royalty such as Madonna, Bob Dylan, and the Clash. Max himself co-produced the Sundance Channel documentary film, HOTEL GRAMERCY PARK, and wrote an article for Rolling Stone magazine about the hotel's history (tinyurl.com/yb98ccy6), making this event a unique experience for anyone interested in New York history and the genesis of a film idea. It will also offer a chance for investors to mingle and learn more about the film.

Investors who have invested more than $1000 and are in good standing are invited to rsvp to: contact@luftmenschfilms.com. Because of the limited space, RSVPs will be granted on a first-come, first-serve basis, and therefore are not guaranteed.  The event is complementary. Questions? Please contact the email above.

Stay tuned for our west coast event which we will announce in the next few weeks.

Karaganda, LLC Campaign Extension

5 months ago


Karaganda, LLC has extended its campaign!

Topics discussed include:

1. Campaign extension/investment reconfirmation/June VIP event.

2. Talks with a major Hollywood creative agency.

3. FAQ: Are you a Russian spy?

4. FAQ: Are you a Socialist?

5. FAQ: Where can I watch Karaganda? 

Notice of Material Change in Offering

5 months ago

[The following is an automated notice from the StartEngine team].

Hello! Recently, a change was made to the Karaganda offering. Here's an excerpt describing the specifics of the change:


Karaganda has updated its offering with 2018 financials and a 2018 CPA Review. They have also extended the end date of the offering.


When live offerings undergo changes like these on StartEngine, the SEC requires that certain investments be reconfirmed. If your investment requires reconfirmation, you will be contacted by StartEngine via email with further instructions.

Submit your Questions for Our Next Update

6 months ago

Before we send out our next update, submit your questions to: contact@luftmenschfilms.com and we'll answer them! 

 

Location Map of Our Investors

6 months ago

Today we crossed $52,000 and are now at 56 investors! As I mentioned in a previous update, our campaign is not unlike a political one wherein the number of supporters is nearly as important as the amount raised. It builds confidence to other investors, and hints at how the finished film will be received. Though we've pledged not to reveal the identity of our investors, check out this map of where they come from. (Apologies to our international investors who are not reflected in this map.)

Just one housekeeping note - if you contacted us and didn't receive a response, please try again. We've had some emails bounce back and have no way of contacting those individuals. Email: contact@luftmenschfilms.com.



  

FAQs on Facebook Ads - V2

6 months ago


Check out the video above for an update on the project and answers to these popular questions we've received:

1. How much money will I make?

2. Can I act in the film?

3. What will happen if you don't reach your goal?

4. How do I get funding for my movie?

3. Will I be credited?

Your Privacy

6 months ago

Thank you SO much to our investors for investing in Karaganda! We will have some exciting updates to share with you shortly. In the meantime, we wanted to let you know:

1. We will not share your name or any other personal information without your approval.

2. Startengine does NOT give us (Karaganda LLC) your email or any contact information beyond your name. 

3. If you would like to start a conversation with us and are an investor, please contact: max@luftmenschfilms.com. You are under no obligation to contact us, but we would certainly like to have your contact info to extend a personal thanks! Also, we want to be at an arm's length to investors for any questions. Because of the nature of this project, we cannot disseminate all information publicly.

4. If you'd rather stick to the updates without sharing your contact info - that is perfectly okay too! 





 

FAQs on Facebook Ads

7 months ago

Facebook Campaign Showing Results

7 months ago

Karaganda Wants YOU

8 months ago

1 Week Done

8 months ago

Our first week is done on Startengine! So far we've landed an impressive $17,700, before our marketing campaign has taken hold. Thank you again for everyone who invested! And feel free to share our marketing materials.

Please be sure also to like our facebook page: www.facebook.com/karagandafilm. As our ads are launched into the dark abyss, we hope you will like them so more people see them. As you know, it takes a village - especially when raising money for a feature film. Not only are we marketing on Facebook, Instagram, and Google Display ads, but we are also signed an agreement with aggregator NewChip this morning to feed more investors to our campaign. Questions? Advice? Do not hesitate to ask and we'll respond immediately. 

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