All Forum Posts by: Jillian Sidoti

Jillian Sidoti presents the first installment of her six-part Private Money Rockstar series. You can sign up for all of the webinars at www.privatemoneyrockstar.com or use the individual links below. 

Doing a Rockin' Investor Presentation

March 28, 2018, 10:30- 11:30am Pacific

Don't know what an investor needs/wants/should hear? This webinar will teach you techniques so that your presentation is not only legal, but highly effective. 

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Future Webinars-

Private Money Law: Everything You Need to Know in an Hour

April 4, 2018

There are a lot of rules about raising money and they can be confusing! This will break down the law in an hour!

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Starting Your Company: When, Where, How, and Why

April 11, 2018

LLC vs. Corporation vs. Partnership. Which state? What about foreign investors? What if my business is in one state and I am in another state? This webinar will answer all of these questions.

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Becoming a Superstar with Regulation A

April 18, 2018

Maybe you have exhausted your current network. Maybe you have a ton of worthy unaccredited investors looking to invest with you but you have no way of taking their money. Find our how Regulation A can help you with making your company a superstar business.

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Finding Your Crowd: How and Where to Find Investors

April 25, 2018

An orchestra would not show up to a country jam and expect to be well received by the crowd. The same goes for you and your investment opportunity. In this webinar, Jillian discusses where to find the right investors for your deals.

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The fine print: legal documents. What they contain and what to look for

May 2, 2018

Investors and Musicians alike don't read their contracts....but you should! Find out what you should be providing your investors and exactly what those documents contain.

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Hahahaha! I was totally kidding!

Hey @Andrew Wenman - I just noticed the "shout outs" to me. Please let me know if you want to discuss. My recommendation at minimum is to provide a SOLID operating agreement and subscription agreement with risks. You should file form Ds if you are crossing state lines and/or not securing a note with a DOT or mortgage.

Why hasn't anyone recommended Bitcoin????

@Corey Keller - I can really help you this. PLease, feel free to message me privately or email me (better way to get in touch). 

First and foremost, there are TWO securities exemptions you want to thing about: Rule 506(b) vs. Rule 506(c). The basics: 

506(b) - general solicitation allowed (meaning you cann solicit from that list); ONLY accredited investors (must make sure the are accredited); no prior relationship with investors necessary; Need to provide proper disclosure (PPM, Operating Agreement, etc.); need to file form Ds. 

506(c) - no general solicitation allowed (meaning you cannot solicit from that list); up to 35 sophisticated investors; unlimited accredited investors; need to have a "substantive pre-existing relationship" with investors; Need to provide proper disclosure (PPM, Operating Agreement, etc.); need to file form Ds. 

You should provide some kind of disclaimer in any emails you do send. 

Best of luck - I am here to help.

@Justin R. - I am a securities attorney that deals with DSTs. @Brandon M. is correct in saying you should involve a securities attorney but you don't need a series 7 license to sell interests necessarily as there is an issuer exemption available so long as you follow the rules. 

Even with a DST investment, you need a PPM and Trust Agreement. You still need to file Form Ds.

A DST is not necessarily the right vehicle to use for asset protection and anonymity - it is the right vehicle to use in lieu of a 1031 exchange for certain tax advantages. Please google "7 Deadly Sins of a DST" prior to considering a DST to use with investors. Let me know if you have further questions. I am also in California.

I am of the philosophy that so long as you are dealing with 2 or more investors, you don't take risks of not providing proper disclosure. I once saw the state of Pennsylvania award triple damages to an investor who complained that a form D wasn't filed in the state. There were only 3 investors and the guy only invested $12,000. 

So, it can bite you in the butt at any time. Proceeds with caution.

Realty Mogul and Fundrise both have offerings that do not require you to be accredited. I would check them out. 

The sophistication test is a subjective, rather than objective one. So, in essence, it would more likely be used for YOU to defend yourself as opposed to an investor to use it to prove they are sophisticated. 

For example, you provide an investor a form that says: 

Check one box: 1. I am accredited or 2. I am sophisticated. 

If they check #2, the onus is on you to get more information. What makes them so sophisticated? Then they must PROVE to you that they are sufficiently sophisticated to enter into the investment opportunity. It is then totally up to you if they are sophisticated enough. 

Hey @Grant Rothenburger - although the "three touch rule" is a good idea (i.e. get to know your investors before accepting their money) - it is not a legal concept and does not create a pre-existing relationship in the eyes of the law.

A "pre-existing relationship" is defined as "intimate knowledge of one's financial ability to invest." Intimate knowledge means you have an understanding of the net worth and income of the potential investor. This can be accomplished with an Investor Qualification Form.

So what is a sophisticated investor to do if they are having a hard time finding deals in which to invest? My suggestion would be look for the Regulation A filings. There are a bunch out there for real estate that offer some great returns. I have done Regulation A filings for any type of real estate you can think of: funds for a specific type of asset class, funds for multiple asset classes, hard money, note buying, etc. Many of the bigger crowdfunding platforms also use Regulation A so they can take money from unaccredited investors. 

What do you do if you are LOOKING for money? 

Here are some hard facts for you: since the JOBS ACT passed, more than 77% of the Form D's filed were under Rule 506(b). This means that most successful fundraisers aren't even using Rule 506(c). 

So how do they do it? 

Well, what a lot of people are doing here right now - building trust, offering information, and educating. Eventually the "crowd" gets the idea and hunts down the syndicator/fundraiser instead of the other way around. It is a pull method of marketing as opposed to a push (and is far more effective in my ever humble opinion.) 

I got to run, but I have more to say about this. Maybe I can add later.