Our Crowdfunding Network Is Growing Part 9

It is amazing how much work one can do and circle back to a breakthrough day. Today was that day for us.

I finally got through to William Skelley at iFunding and we sorted through some of the details needed to unblock things with their agreements. It turns out that they're operating under the old securities laws and thus a lot of the reasonableness hang-ups created by the SEC of late are not really an issue with raises through their site. We're going to have our attorney draft some indemnification language to carve this risk out of the JV and we'll be up and running with those guys soon. I am going to do 1122 Linden Street as our first deal with them and we'll see how it goes. I got some insight on how they fund deals today and it sounds like it will be pretty easy for a small raise like the $500k or so needed for this project. It will be a good first project for us to get started with.

We also got a chance to speak with Katlin at Fundrise today. It turns out they offer Regulation A placement services for a nominal fee and have a back-end broker dealer to deal with the risk in vetting investors if one wishes to limit their raise to accredited investors only. I'll sort through these details soon and we can start testing the waters and growing our network more. We already have money raised for a neighboring property to the one specified above through close investor relationships, but we'll use that project to get through the process and get something on the site. We may slice the deal up some more with this investor to spread risk if the timing works out okay. This will allow us to start the clock on our Regulation A compliance and get our network going. It will also help to get people from my existing network to join since they really haven't had a compelling reason to do so to date. It remains to be seen if the new Regulation A+, Tier 1 rules require onerous filing requirements and financial statements so we'll have to see how that works out once the final rules materialize. They're sure to change some later this year or early next year once the SEC defines the new rules.

We have one more call with another securities attorney firm later this week to discuss doing our own fund documents. We have a first draft of our new capital branded website up and I will start blogging on it soon. We have big plans for the site, but the immediate goal is to get something functional to start soliciting funds under 506c and integrating things with the CrowdBouncer software. This will have to be on the back burner until we get things done with iFunding and Fundrise to test those sites out.

In a few months I expect to be raising all of our money as follows:

1. Through portals like iFunding without the need for lenders. Eliminating lenders and personal guarantees is a big motivation for funding deals this way

2. Through portals like Fundrise with a construction loan and debt component

3. Through our own website with our own, separate 506c. I think have the best attorney option for this selected, but we want to give this one last firm a fair shake later this week

For our current projects item 1 above is probably the easiest way to raise money with the highest cost of capital. Option 2 probably has the lowest cost of capital, but the most overhead. With Option 3 we have the most control, but the most overhead and lag time to get things funded.

Time will tell which option is the best for us. My sense is that iFunding will be best for our current deals and that Fundrise or our own raise may be better for later raises that are larger, but this may not end up being the case.