Raising Capital: Fund Vs Project Specific?

[Collin Borns]

Hello everyone,

Out of curiosity, when first raising capital is it easier/better to 1.raise a fund or 2.get capital promised if a deal meeting certain criteria matches with a specific capital providers needs?  Are the SEC laws regarding raising capital applicable if raising from accredited investors vs non accredited?  Does it happen often where a capital provider says they will invest, but when a deal comes along they don't put their money where their mouth is? How can you avoid this?

Thanks 

[Todd Dexheimer]

1. I have not done a fund yet, but from all the sources I have talked with a fund is more difficult to raise. You are raising funds for a general idea/game plan, but not a business in place. I would say the fund would be more about your track record. The raise on a deal is about the deal and you/your team. 

2. SEC laws are applicable for any investor - you can raise funds from both accredited and non-accredited, but talk with your SEC attorney for specifics. 

3. Yes. Investors back out or don't pull the trigger. There is no way to fully mitigate this, but be sure to have detailed conversations with them prior to getting them in a deal. Have a plan in place and make sure you feel they are committed. Also, if you have 5 mil committed, I would plan on only being able to raise $4M.