All Forum Posts by: Derek Raivio

@Derek Armstrong

Customer Relationship Management. 

@Don Konipol

Good stuff. Thank you for the clarification, you have definitely given me some clarity. 506 C seems like a very strong option. I will connect with legal next week and move forward.

Thank you!

@Ola Dantis

We are in the final stages of our paper work and we will have the option to change from Rule 506 B to C.

My question for legal and syndicators are:

1. - What are the drawbacks opting for 506 C vs. B?

Tj Hines Specialist from Tampa, FL

replied about 8 hours ago

@Derek Raivio ,

After speaking with our legal counsel we have opted for Regulation D Rule 506 B. My question for the forum is- Since we cannot use general solicitation or advertising to market our fund, what are the most effective and creative way you have raised funds in this space? (Since you're 506B, you're right - general solicitation is prohibited. How's your network? Do you have trusted friends and family members, business associates, co-workers that believe in what you're doing. Do they see the value there. This is who I would start with.)

Myself and our team has a respectable “Rolodex”; however, we have been told by legal that even friends or friends cannot invest in our fund since there isn’t a “preexisting substantive relationship”. (Don't understand why you're saying friends and family can't invest with you. The pre-existing relationship is already there. Not to sure that the SEC attorney you're dealing with is advising you correctly on this. I would suggest reaching out to one of the best SEC attorneys in the game that deal with a ton of syndicators. @Mauricio Rauld)

Is there a work around? (There's no way to work around it)

How do you market? (You can't market to the open public. If you want to market to the open public, the best thing to do is to file Reg D 506C, which allows you to advertise to the masses without any consequences.)

What do you say when asked about your project? (You have to be honest and tell them, that we need a pre-existing relationship. You need to have a few meetings with that individual to learn more about them and their financial goals. After the 3rd meet or so, you should be good to talk with them about your projects)

Can someone that hears about the fund promote it to friends and family? (They can make introductions and from there you should schedule a few sit downs with that prospect before they can get access to the deal)

Can that same person promote it during an interview? (Not sure. A lot of these questions you have, should be easily answered by your SEC attorney, who you guys are working with. If they're not answering these common questions and you're paying them, I suggest seek counsel elsewhere. @Mauricio Rauld)@

@Tj Hines

That's what I was looking for. I have heard other syndicators say they generally have 3 points of contact before showing the prospect the deal. It seems like it could be a grey area though. Is this common practice when raising capital in the syndication world? And after 3 conversations, does this generally count as "pre existing substantive relationship"?

@Don Konipol

I appreciate your opinion.

You are correct in that I do not have extensive experience in raising capital. However, I have been investing in SFH and smaller MF communities since 2011. One of my partners and GP in the fund has been developing for 40 years. He owns/has developed Walgreens, Fred Meyers, retail, office, and apartments. My point is that, what the GP's lack in syndicating prowess, they make up in developing/investing experience.

We have a size-able network, and raising $30M is definitely doable. However, there is still a possibility we come up short. That is why my initial post is whether we should bypass rule B and immediately designate rule C exemption? Also, what are the downsides of Rule C? Time? Cost? Risk?

Would you recommend we immediately opt for rule 506 (c) and do not attempt 506 (b)? Or, skip both of those and partner with a securities broker?

Don Konipol Lender from The Woodlands, Texas

replied about 12 hours ago

@Derek Raivio

I would get very nervous when the person in charge of raising $30 million through pre existing relationships asks how do I raise $30 million when I don’t have those relationships. Am I missing something here? How experienced in syndication and raising capital is your company? I’m going to offer a wild guess that your company is experienced in commercial real estate, but not in syndications. If my assumption is correct then you need to engage an outside placement agent to raise the capital using their contacts, possibly an equity real estate crowdfunding site. IF a reputable placement agent or crowdfunding site will accept your deal.

Sophisticated and accredited investors, for the most part, invest in people and sponsors with verifiable track records of successful similar investments. If you have this a successful $30 million capital raise, while still very difficult, is possible. Without it it’s impossible.

Don Konipol

@Don Konipol

I appreciate your opinion. 

You are correct in that I do not have extensive experience in raising capital. However, I have been investing in SFH and smaller MF communities since 2011. One of my partners and GP in the fund has been developing for 40 years. He owns/has developed Walgreens, Fred Meyers, retail, office, and apartments. My point is that, what the GP's lack in syndicating prowess, they make up in developing/investing experience. 

We have a size-able network, and raising $30M is definitely doable. However, there is still a possibility we come up short. That is why my initial post is whether we should bypass rule B and immediately designate rule C exemption? Also, what are the downsides of Rule C? Time? Cost? Risk?

Would you recommend we immediately opt for rule 506 (c) and do not attempt 506 (b)? Or, skip both of those and partner with a securities broker?

@Alina Trigub

We have a good base of existing substantive relationships in place. $30M of capital gains requires a size-able pool of investors to call on. Our attorneys have mentioned that if we go the 506 B route, it will lessen our risk and liability because we do not have to verify if an investor is accredited or not. Makes sense to me, yet i'm not sure if it's true or not. Also, does it cost more to assure an investor is accredited and opt the 506 C route? Is the extra cost worth being able to solicit the fund? What's your take ? @Amy Wan and @Mauricio Rauld

@Melissa Murphy 

Thanks Melissa! We are excited for what it can bring to town.

@Matt Wills Thank you for your insight. Regarding a pre-existing substantive relationship, I have heard and been told that a general rule for syndicators can be 3 points of contact prior to introducing the investment opportunity. The first, he introduction (where you learn about each other and build some rapport). The second point of contact (discussing the potential investors financial situation and goals). Lastly, step 3 (have the potential investor complete the 'accredited/sophisticated investor form'. Finally, introduce them to the fund and what we are offering.

Are these syndicators going about it wrong?

And yes, we have a CRM in place!

@Omar Khan

We understand it is going to be a challenge; however, the property and potential really speak for itself. 

You are correct in that I do not have extensive experience in raising capital. However, I have been investing in SFH and smaller MF communities since 2011. One of my partners and GP in the fund has been developing for 40 years. He owns/has developed Walgreens, Fred Meyers, retail, office, and apartments. My value add is to bring investors and interest to this opportunity.

We have realized that if we struggle raising capital, we will seek a securities broker.