Private Money pledged to "fund"

[Joaquin Caballero]

My partner and I have been discussing the idea of starting a "fund" for our LLC that would allow private individual to "buy in" to our Property Acquisitions capital. The more they invest, the better their return or obviously, ownership of the fund (shares?). This would be similar to crowdfunding, but we would be offering the fund ourselves, rather than on one of the bigger crowdfunding exchanges, and the fund would be used as a Line of Credit by us, not simply attached to the rehab of a particular property.

I'm pretty sure we would need the assistance of someone who is Series 7 or Series 13 licensed, and possibly an attorney.

Does anyone have any experience with this sort of things and can point me in the right direction as to where/how to get started?

Thanks in advance!

[Bryan Hancock]

This is a rather complicated subject and there are some mixing of ideas above.  Here is one idea:

These are two separate things.  Investing more should equate to more shares the same way you'd buy more shares of anything if you invest more.  Tying what investors get based on how much they invest is a completely separate thing.  What fund managers frequently do for this type of incentive is structure compensatory shares that can be subordinate to cash shares to give people an incentive to buy more or to buy sooner.  They can bonus investors with these shares if they invest more.  

How would you generate traffic and where would the investors come from?  Would they be local, intra-state, international, etc.?  This matters a lot as to how the fund would be set up and what exemptions you'd select.  There would be no reason to use this as a line of credit because you'd control the funds.  I think you're mixing a few different concepts here as well unless you plan to offer the investors the opportunity to buy into a line of credit that would be structured as a secured or unsecured debt raise.  I think some clarity is needed here.   

It depends on what you're trying to do.  If you're selling the shares yourself you may not need a securities license.  You definitely WILL need an attorney though.  This is NOT a do-it-yourself project.  Proceed with extreme caution.  Note that if you plan to enlist someone to broker securities on your behalf you will need a licensed individual.  People with these types of licenses infrequently broker securities for small operators though.  

As far as pointing you in the right direction if you PM me I can introduce you to some of the best securities attorneys in the country and specifically folks privy to the new securities laws Jon Holdman mentioned above.