Investor Strategy Call – December 15th 2021

Speaker1: [00:02:40] All right, just getting the call started right now. Let’s see. Ok, see if few guests here and I see a few members here as well. Let’s see. All right. I see buses here, so yeah. Just quickly, how to call how these clothes work. Yeah. Simply in a chat, either just raise your hand or send a message in the Zoom chat. If you have a question, then we’ll walk through it. For example, one example could be app to set up a five or six see fund. How do I start? And whoever reached out to that’s a simple question. And then we’ll just walk through in detail to see how we can get it done. So it’s going to stand by because today seems to be mostly guests and a few members, only two members right now.

Speaker2: [00:04:23] Hey, hey, how’s it going?

Speaker1: [00:04:27] Went really well with you today.

Speaker2: [00:04:31] It’s going good. Well, as you know, I joined last week. And so this is my first call here, and I’m trying to kind of get acclimatised to the the the whole portal and everything. And I went to some videos and I have several questions and probably discussions. So I wanted to pick your brain a little bit as to the process. The quickest way for me to get up and running, if you will.

Speaker1: [00:05:01] Absolutely. Let’s dive right into it.

Speaker2: [00:05:04] Ok. So. Um, first of all, I like the portal. Right, it was cool. It’s pretty pretty much kind of very straight straight. What’s it called process wise? You know, I could see where it was heading. So I went to I went to all the the first part on board in groups and so forth. And then I went through the. So now I’m in prepare your data room and I had some questions about that. And the questions really were basically. I mean, the information that I’m required to upload, that was what I was not clear on.

Speaker1: [00:05:56] Exactly. So, yeah, we’re going to walk through that because what’s interesting is because we’re looking at that part as well and what we actually do when we get to that parts. We just honestly just send a manual email and just go back and forth manually at this point. And we’re be a bit more clear because one example is, and I’m just going to. Off screen share, while I do some magic to get the list of items. Yes, so basically there is a general data room that just has all the agreements that we see. Like, let’s say there’s a mid-market investment bank, these the request, all these documents. So we have a quote unquote general data room where it says, OK, here are all the documents that are required of these documents. What documents does your company already have? And what companies doesn’t the company have? And then we just for the ones that the company doesn’t have, we just give templates from past deals that we’ve seen before redacted, obviously. And then just so we can get it going ASAP. So I’m going to actually pull up a quick example.

Speaker2: [00:07:00] Second. Where is this?

[00:07:14] There we go. All right.

Speaker2: [00:07:17] So I like I like the term self-serve investment banking. I think it’s cool.

Speaker1: [00:07:23] Thank you. I’m surprised, I’m surprised that it wasn’t created by the time we saw it. And we have a lot of we actually have between, I guess many announcements. We have a lot of portal updates that are coming because, you know, we see we see some we see some ways of. And just making our things even more quote unquote proprietary, and so we have a major product update coming in two weeks. It actually makes them a little, but in the interim, let me just share my screen.

Speaker2: [00:07:53] Ok. But.

Speaker1: [00:07:55] All right, so take a look at this because. Yeah, so it’s simply an email, so here are all the documents that are required at minimum we see we see a lot of either either new five or six seed deals. They do just like a corporate profile, just the overall the org structure. No magic here. Then the securities documents. So if you have these subscription agreements and all that, then they can be put in here financing documents, financial statements, financial projections, past customers, if any tax, if any employee and director information, property leases, contracts, litigation, environmental or receivables inventories. Some of these may not apply like inventories doesn’t. It doesn’t always apply in every business and just a general transaction. There’s licenses and miscellaneous and.

Speaker2: [00:08:51] The. Is it the.

Speaker1: [00:08:56] Yes, sometimes they ask for like the accountants and lawyers that are being used, and that could be put probably in corporate and organizational profile. And yeah, in the Google Drive, we have a Google drive of just like a dummy type of folder, and then that’s pretty much it. And then once that is there, then because we’re not lawyers, we can we can help with all the five or six key stuff, but we can’t provide a legal opinion. And then but then we can help you with the valuation or underwriting or anything like that if you need that as well.

Speaker2: [00:09:27] Ok, so I want to. Is it possible to kind of go through these, but I mean, if anyone has any other questions to.

Speaker1: [00:09:36] Let’s see now you can take up the floor, I mean, we’re prioritizing, let’s see. We just have we have OK, some of the guests. So we have some guests and we also have some members, but we’re prioritizing the members. So I mean, take as long as you need.

Speaker2: [00:09:52] Ok. All right. Fair enough. So I’m going to just kind of click a screencap, although I know you could send that to me by email, but I took a screencap of the list so I can kind of review it for myself, you know? Good. Let’s see here. Who read what? Okay. Corporate and organizational profile. Right. So. Um. Ok. Let me tell you a little bit quickly about our fund or funds and. So I have to I have to think about it a little bit because there are several real estate projects or deals I could raise capital for. And these are these are from. I have I have two primary areas. One is my my home building company, which is which is effectively a startup, although we, I guess, an early stage. We moved out from proof of concept or to early stage. We already proved our concept. Everything looks good. We are looking to scale. We we have some capital that I raised personally personal capital ActionScript. And yeah. And so what? And then the other the other projects were other type of stuff is some development to the construction site of the apartment. So I have an apartment deal and I have a subdivision project, either one of which I can go ahead and do so. Yeah, so not to. If you can kind of run through this list a little bit more power, it’s just like a quick sentence on each. I think I know most, but I just wanted to get your take, if you will.

Speaker1: [00:11:50] Yeah, absolutely. So those one one real estate deal that we did a while ago, so that one, it was just to see, OK, who are the who are the entities that own more than five percent? So just the individuals that own more than five percent. We are individuals that own more than five percent is a typical question that we see a lot. And then, you know, in which companies are sort of like a a almost like a flowchart or an or an image of the organization, like, for example, these two companies, you know, some people they may have like this company may be like the owner of this company or maybe their sister companies, or maybe they’re completely separate. So just so that people know which companies, it’s like some company. So five percent company, a let’s say, company, a company. Uh, a is

Speaker2: [00:12:49] I got an individual, it’s ownership on company structure, if you will.

Speaker1: [00:12:54] Yes. So a woman five percent, more than five percent in Company A.. And let’s say it’s something like this where it’s like this person is in company A. And then maybe you have another person in Company B.

Speaker2: [00:13:09] We.

Speaker1: [00:13:20] Yeah. Kind of like a little ASCII art, but, you know, just something like this where it’s like this person is

Speaker2: [00:13:26] Maybe a little. It can be in text or org chart, if you will, and just a company structure. Yeah, and I have that. You know, it might be a little bit pretty colors, you know, not really real. What’s the word professional looking? Yes. And then I presume here also things like what’s it called? Articles of incorporation and those type of things like any operating agreements and whatnot, perhaps between the partners, if you will.

Speaker1: [00:13:57] Exactly, exactly. That’s that’s a good point, because yeah, it’s just to substantiate substantiate proof that all the entities exist. So that’s a good point. So it’s like incorporation as well.

Speaker2: [00:14:09] Ok. And let me ask you this, generally speaking, when we were at this stage, you are you assuming here that the fund structure is already set up as India is already LLC and so forth and there’s already a PDM, if you will?

Speaker1: [00:14:34] Yeah. Good question. So some people that join us because people join us in different stages, so some people that join us, they’re in the process of making that. So when it comes to security is right. So. Some people have everything that’s 100 percent ready to go, and they just need that. They just need the money. And then other people, there are the other extreme where they don’t have anything and then they’re building everything from the ground up. So. The point is like, I mean, for it to be transacted, like for money, to be like the securities agreements have to be done or they have to get a broker dealer or a lawyer to do it for them if they want to get investor money, because if not, then the investor has no way to put the money. So that’s really the ultimate thing. And then everything else is just if it can be blood, it’s just not to look stupid in front of the investor. And that seems to be don’t seem to be the two priorities here. If that makes any sense.

Speaker2: [00:15:28] Okay. Yeah, makes sense. So just just to let you know. So while I kind of conceptualized my fund a little bit previously, so previously I had a I had a kind of a I had a pitch deck and I went on raised and raised some soft commitments just based upon the pitch. Oh, but it was more of a. We were going to essentially joint venture, right? Yeah. And I raise soft commitments, which really and truly is cool and everything. But you know, that doesn’t necessarily mean money is deposited in your account. They’re just basically, you know, if I didn’t know anything about funds, I would have just said, Hey, there are some people interested in funding the deal. Right? That’s all. So but the thing is. Well, and that particular deal was a pretty big deal. It never so far hasn’t reached the stage yet where we’re ready to put pen to paper and ink something, if you will. Okay. So it’s still it’s still we’re still negotiating with the sellers and yada yet. But on the current fund, that was a big old, complicated real estate project. But on these two other things, I mentioned homebuilding and land development. It’s essentially the home building could be a fun, maybe an open fun, and the land development is more probably closed where it’s specific, almost like a syndication. So. So that’s that’s the thing. But more recently on the home building, I was able to kind of conceptualize what would be my return, if you will. So sort of like my waterfall, which I haven’t done before, period, I just kind of knew what the project would make. I didn’t really conceptualize what an investor would make, right? So I think that was an important step. So anyway, I just wanted to mention that. So, you know, like kind of while I have the concepts of my fund, I haven’t really put together and gotten the CPM done yet. Yeah.

Speaker1: [00:17:56] Got it. I mean, I mean, that’s that’s fine. And the thing is like, we seem to we seem to resonate a lot with people that are at this stage. I mean, we just had an interview with Abdal, who I think I think you’ll be really valuable if you spoke with him because I mean, he I mean, he’s doing a $100 million D and a $75 million rig A, he’s doing more. I believe is doing more of the first model rather than the ground up model, but he has a few grand ups. But I mean, I mean, he’s he’s a mess. I mean, he speaks to billionaires and he’s he’s really good at this. So I mean, I’m going to introduce you both to talk about that. But. But I think I think what’s important at this stage, too, is just to continue to get like a lot of these discussions because some people they work on originating the deal for a very long period of time and then they don’t talk too much to the buy side. And so by the time they work on the on originating the deals and looking at the project, there’s it can be beneficial to also have some warm just conversations without any agenda to prospective people who can finance the deal as well, so that you can bring that into the conversation with the sellers. And so, so that because the last thing we want is for you to get these deals originated and then it doesn’t fit any mandates of any investor, right?

[00:19:21] Does that make sense?

Speaker1: [00:19:23] I don’t know if you’re.

Speaker2: [00:19:27] Oh, yes, sorry. Makes complete sense. Yeah, yeah, so, yeah, because, you know, I’ll tell you the land development projects. Are typically, well, if I had see. And here is the little tricky part about funds I find in sort of conceptualizing and framing them out, if you will. So. You can you can have a fund, you can you can have a you, you can have a good idea and you could even be making good returns, or you can be able to feel confident that you’re going to make those returns. But as to how you actually set up, pay your investor set up, what is your return waterfall to your investors? That can be kind of tricky, for example, on my home building fund. I know that I have a certain. Target acquisitions and a process and a disposition of of those homes to sell, and I have a certain amount, I know my returns and so forth. Ok. Yeah. To commit to a fund, I have to be able to scale that process or to repeat that process, right? It has to be a repeatable process. Otherwise, I’m essentially raising money for a fixed set of assets and I go build that right and then I make returns, and that’s it. The fund stops and that’s it’s a single strategy and you go from there.

Speaker2: [00:21:11] So it was a little bit easier to conceptualize the home building process because the whole ecosystem of the home building. I have my hands in all those parts so I can understand it and kind of promise it on the land development side, which is to say that fund it is a specific fund. Right. It’s a specific project, it’s almost like a syndication and some of the projects, I mean, typically the total raised total capital stack is at least 10 million typically. So private equity measures senior debt typically 10 million or above. And so raising the capital for that deal is a fund is more of a syndication. But. It’s not a typical waterfall, if you will return. It’s more of a, you know. Private equity investors have X amount of equity in a project. They make a fixed return and there are no hurdles or there may be some prefs and stuff like that. So I haven’t really framed out the land development side of things. I think we want to target eight percent pref with a total 20 percent or so. I think that’s my typical goals for both funds. So anyway, you know, long winded, we just want to get get it out here.

Speaker1: [00:22:45] Yeah, no. It makes sense to get where you’re coming from. Oh, I see. Oh, look who it is. See, deal is here as well, and obviously feel free to chime in here. I think you have something to say as well. I was about to join go in, but I will suspend my thoughts if you have something to say.

Speaker2: [00:23:03] Yeah, no, absolutely. So I think I just listened to the last five minutes, I think what I’ve seen,

Speaker1: [00:23:11] You know, maybe,

Speaker2: [00:23:12] Maybe it’s different from from what you’re trying to invest, but what market are you in? Or in the U.S., Canada? Yeah, U.S., Florida, Florida. Yeah. So what I’ve seen is, you know, I’ve seen funds, but only focus on land acquisition, zoning and then permitting all the way from phase zero to phase one. That’s one for one fund that can be one fund. It’s focused on that because the hardest part of land development or grand development is. Is the zoning piece and then the permitting piece, as well as the approval process that can take anywhere between six to 12 months, depending on your reach within the within the Board of Aldermen, Commission, Development Commission, Board and so on? So that’s very common in Chicago. That’s very common in New York. That’s very common. And in Florida and any other major primary cities, Miami, if you’re in Miami Fort Lauderdale area, this is a primary city. So therefore there have to be some sort of influence. So I mean, I think you’re absolutely right. You know, with land development or development, you do not want to do a waterfall because obviously there is no cash flow for at least nine to 12 months. Right. And then there is there is really an upside and an upside offer. I wouldn’t really count. Personally, I don’t like counting the air as part of the projection. I like to to really look at the. Internal rate of return. So once the land is improved, what’s the return and if that return is typically around 20, 20 and up? I think a lot of investors would be OK not having any cash flow for six months, 12 months, but they know at exit they are, they are.

Speaker2: [00:25:12] They are targeting 20 percent. I are plus plus. So, so so I think, you know, there are different structures you could look at. But overall, what I’ve seen done, for instance, and even in Milwaukee, where whereas at development, they had a fund if a million dollar fund created specifically to acquire the land, improve the land rezoning permitting and then do it pick out with a construction loan or a bridge loan, which returned the principle back to the investor and at completion. Then they have an upset participation, which is first phase two at phase two. You only six months away from making money, and the way they do that is they’d have a structure of parking lots that actually within six months, they can start charging the office across the street to park the car. Now they are generating some cash, but also improvement on improved land. Rezone land and unincorporated land have different value. So an investor, they are investors that like more risk because the equity multiple is 3x and up, so they all carry phase zero all the way to phase one. But an investor like myself or investor who prefer cash flow that may be open to. That may be open to construction or development and vest. They would only invest if you had only already had your permit, you already had your zone completed and approved and building plans approved and you’re ready to go.

Speaker2: [00:26:57] So they have a little bit more reassurance. And in primary cities like Chicago, Miami, this is very effective because the hardest part is getting getting zone and building plan and prove once you have that, then you’re in a better place, whereas you can flip the contract or you can flip the project and exit, you know, two or three equity multiple because this is the hardest part. I mean, in D.C., for example, you’re spending two years to get zone and approve for a project. So again, depending on the market you’re in and you’re rich within the Urban Development Commission and so on. You may have some left there, but most investors would look at it that way. Or maybe you have an anchor investor, you create an LPA to to to to fund the entire phase one phase zero approach and then you create a syndication or another fund for the grad of construction projects. So there are many ways you can do that, but it depends on I don’t again, I don’t know your project. I don’t know exactly what you try to do at the end of the day, but with development, it’s hardly it’s hardly. It’s hardly a consistent approach, but it’s a repeatable process. And if you get the process down and break down at which phase you’re being invested in, I think you have a greater chance of peaking interests and and find the investor that you need within that space.

Speaker2: [00:28:30] Yeah, that is a very interesting way of looking at it and. Yes, actually, because I think I think you you kind of, you know, it’s interesting sometimes, you know, these type of calls and stuff, you know, allows you to extrapolate, you know, into your own situation concepts that you would have like I wouldn’t have otherwise thought about. So I do like the fact the phased concept because agreed land development is there’s you’re right, there are about three phases. Phase zero is almost like fine land. Yeah, right. Yeah. Yeah. Exactly. If you look at if you look at growth capital, uh, capital, they have it fun and all they do is the only by development project that are at phase one or two. And they invest primarily in Utah and Orlando area. And the project the project has been the project have been very successful over the last three years because they do not deal with zoning permitting and the local, the local government, because they don’t have the rich. However, they are able to buy those completed phases and spring forward three times faster than if they would have done it themselves. Again, we find a way you get the most benefit. Yeah. I have to drop. I have another call, but I just wanted to chime in real quick for the past. Oh no. Excellent. Thank you. I have a question for sure. Thank you.

Speaker1: [00:30:15] Awesome. And I mean, clearly, because that’s a really important perspective. I wasn’t even going to jump into that. But ultimately, it looks like the point that Abdul made was about optimizing around the fact that the there’s a there’s a point at which the project could be shovel ready and then optimizing around like at that stage, oh, just getting the shovel ready type of investors. And prior to the shovel ready investors land acquisition, I don’t know if the land is owned or not. I can’t really remember. But optimizing around, OK, people do help you for land acquisition and also like people to help you for the permitting zoning and all of this stuff. So it looks like phasing it out that way was his recommendation because it’s too much. It’s almost a lot. It’s a lot of different mandates, right?

Speaker2: [00:31:05] Yeah. Yeah, yeah, yeah. So. Good point. Good point. Um, you know, because so I like it. I like that thought because, well, a lot of funds do land development as a, you know, like you can get investors and so on. For the overall thing there is there is very much a process to it. So. And yes, they are exits. I never thought about it that you can have a fund centered around. I like the term upside participation if developer, as we call it. I’ve heard a term early investor benefits, but I think upside participation sounds a little intuitive. So that’s cool. Yeah, so OK. So. I mean, that alone that gives me generally on the home building and land development that gives me kind of an idea of what I would structure because you mentioned IRR of 20 percent on the land development. So that makes that makes that makes sense to me. So. So, yeah, we were we were discussing corporate and organizational profiles so I can provide those documents. That’s cool. And then what? What securities?

Speaker1: [00:32:33] Yeah, and securities. But and here I mean, if I may like even because you’re talking about the home building and then the land development and sort of it looks like you were talking about which one to kind of hit first. But before, I mean, before we even dive into before we go to the ground, I like going to the sky and saying, OK, what is the ultimate goal that you’re looking for here? Is it like, are we? Are you optimizing around, closing investors quickly or is it just to get the. Because it looks like you’re more comfortable with this deal based on the types of deals you’ve seen, and this one seems to be more something that you’re more getting into. So before we even go into the year, what do you think is the thing that you’d like to optimize for for you?

Speaker2: [00:33:15] Well, you know, you know, um, you know, not to be honest. Sometimes what is actually complicated in this thing is the fact that I have opportunity or skill sets in both home building and land development or for sure, I have deals. Ok. And so ordinarily, some there are some, some folks that may not have any strategy, and they’re trying to conceptualize a strategy period. Ok, so that’s one type of hurdle to cross. My hurdle now is I have, you know, it’s kind of like these, these things, you know, if you count your blessings, type of thing. But I have good problems to solve here. Yes, you know, good problems to solve. But it does kind of essentially instead of doing one fund, I’m doing two funds. It can confuse investors sometimes. Right? So I’m trying to separate the two by just coming out front and saying, Hey, I have to offer opportunities. One’s in home building, which is more construction oriented. And then the other is in land development. And I like that. I like that. I can now say I have an understanding how to save this. Land development has multiple exits, with construction being the final exit towards the end, you know, so. So yeah, and we can build a fence around that.

Speaker2: [00:34:47] Here’s the thing to answer your question. The whole building, while I have competence around it, that one is not a big raise, if you will. I think I talked to you in our intro that, you know, if I were to have, I don’t know, $2 million in cash and, you know, period with 80 percent in debt, then you know, I can I can leverage about 10 million cu.m. And I can do quite a lot of homes and do very comfortable. But and so raising that two million is not a lot of probably high net worth guys and stuff like that. It’s not impossible. I don’t need it all at once. I don’t need two million because I’m not ready to deploy all two million right now, for example, but we can certainly ramp up to that and more on the land development. And the reason why I have to have these two in a way is because I can’t build homes in fund one if I don’t have the land to build it on. You know, Bill just said that some companies do only look at phase two, you know, land that’s already been through some entitlements and zoning. Right? So so in many ways, the land development has to proceed.

Speaker2: [00:36:14] The home building. So for me to build larger projects, I have to go to plan right now, whether I whether I do that, I buy land that’s ready to go or I or I buy raw land and do the zoning. My kind of skill set is I do planning. I’m a licensed planner. I’m a licensed engineer and I’m a contractor as well, so I can do those three things. You know what I mean? So, you know, it’s almost like one fun, but with two part strategy, if you will, or even three parts planning, which is like a phase one. Getting the zoning entitlements to is doing the engineering and getting that land ready permitted to go vertical. And then three is the construction. So it’s almost like one fund with three elements and that that’s what it may evolve to someday. But as of right now, it’s probably we got some ground up construction deals and probably just want to go go ahead and race for it because it’s around 10 10 plus million, which I think is in the range of what what you know, what your program is kind of both about, right?

Speaker1: [00:37:36] Yeah, the big stuff. Got it. And yeah, because it looks like it looks like it got three, I guess three key pieces. One is it seems like the. Because a lot of what we what we do is just, I mean, raises our common and will we tell people to do is just whenever there’s the opportunity, just because we we just want to know what’s what investors will say yes to and what’s true and everything. So we usually see it as. Air into the side of simplicity whenever possible. So, yeah, because you really have, you know, you really have experience in home building and then you’re seeing that you have these other core competencies and these are the many, many, many good opportunities just really to see, OK, what is the greatest one? And then how do we take advantage of the greatest one?

Speaker2: [00:38:20] I think the best one is if these if there’s a 50 apartment deal, ground up construction, there is a two hundred and seventy seven townhome project. I thought I thought those are pretty good sized deals if some meat on the bones on it. And I think if I could raise capital for any of those, that’ll be, you know, pretty, pretty neat.

Speaker1: [00:38:47] Beautiful, and it looks it looks like a reasonable effort, and it also looks like the ground up thing can be like a. There’s a long term plan there as well. Yeah, because some of these things don’t happen overnight when it comes to to get in and shovel ready and building them and everything. Those timeframes. So I think the point is like on on the pragmatic point of view, because that’s the point I’m personally more pragmatic. Sure. Based on the conversations you have because I mean, if somebody if the conversation was with somebody that is only obsessed with shovel ready, then I would just only sell them exactly the shovel ready type of transactions. And then if somebody is only on the home building side of the conversation, then I’ll just only optimize around that. So I think from a pragmatic point of view, that’s something that can at least get the investors in the front door and then we can obviously look at campaigns and things like that. And what makes sense?

Speaker2: [00:39:38] Well, I was wondering if if there is. Because if I go pitch, if I were to pitch. The apartment deal, so what we were going to call it to get everything all in one under one umbrella. We were just going to call it a bill to rent one. Right. And and within that build to rent fund, there is construction which may involve home construction, and then there is apartment development projects. Right. So and rather than separate them by skillset, if you will, which is how I think about it to an investor, they’re just looking to make money. And if real estate is your asset class, then they might be good with it, you know? So that’s that’s how I was kind of thinking about it. Just call it a bill for rent. Bills for rent in of itself is very popular now anyway. There’s a lot of good literature on that. So, yeah.

Speaker1: [00:40:47] Got it. I’d agree to some extent, and I also say that I wouldn’t want to, as long as you don’t go too deep in the rabbit hole of creating the entire know, for example, paying a lawyer and doing everything, getting the people one hundred percent rigid for only one structure and then come pitching to investors. They say they want something else. So I’d be kind of I’d be a bit more, you know? Yes, I think that’s a good hypothesis. And I do some testing to the market and hit some investors to see like, OK, what are the types of investors that what do the investors want? And then then from there, then we can you can really fine tune it based on what the market is saying. That makes it

Speaker2: [00:41:29] Okay. Ok, and this is where I think the I think the powerful concept that I got in your program so far is the mandate, you know, because I kind of I really I really before I joined, I really felt that that that concept when mandate was very. Like, in other words, why go develop a fund? Based upon what I think people want and like he just said, why just like go find out what investors want and then cultivate or craft my free my whole deal based upon what we already know they want? If that makes sense.

Speaker1: [00:42:11] It seems to make sense that way, because somebody can be Jordan Belfort and then try to scream at investors and what they want, because two things typically we see two things happen. One is if you look at the other, some of the other members and even people, just people from observing them, it seems that the more rigid and force the structure is on prospective investors, the more either unsophisticated or small investors are, because the less sophisticated investors are less direct with what they want, and they’re more easy to be sold because there’s less money, there’s less at stake. So it seems to it can be easier to inform somebody else’s structure on what they want. But then if the investor is like an institutional investor, they like, we had to step one of these private equity deals. They’re about to send 40 million and say, Oh no, we want this, this does that. And nope. So because they know what, because that’s the way

Speaker2: [00:43:03] I watch your video recently, probably a couple of days ago or yesterday or something where you talked about family offices versus, say, funds. Oh, I actually kind of like I. I would. I would somewhat. I would somewhat. I mean, I don’t have a lot of experience, I really don’t know. But I kind of got that impression because I do deal with. Uh, should I say, too? Maybe, I guess I should say more like one family office, they don’t come out and say they’re a family office. But when everyone has similar last names and and you know, they use the investment attorney that has done work for for the dad and the granddad, you know, it kind of flows that, hey, you’re basically a family office. Okay? But yeah, they have they have pretty, you know, it’s sort of like, I don’t know if good old boys is the right term, but sometimes I get an impression that it’s very relationship driven. You know, and I can have a perfectly good deal. But yeah, it is. It is, too. It is to two family offices or family family money then. And they’re there. Sometimes they have a mandate, sometimes they don’t. That is very clear. So it all depends some funds. I think even family offices can be very clear. We do. Some land development projects, but we want to have these criteria met, you know, and sometimes they know very clearly what they’re going to do. Sometimes they don’t. Anyway, it’s back to that email started this distract. But yeah.

Speaker1: [00:44:52] Yeah, no worries. No, no, it’s true. Yeah, and there’s there’s not a single one single approach that does best because I mean, I flew the Richard Wilson family office events, I think, in Miami. Yeah, sometimes those are work and it’s just because I mean, I mean, if people are coming into this type of work and then they’re new to, then the mandate approach is helpful in the sense that, I mean, we can get some we can get one deal to a private equity firm today in Canada, and then they would say yes or no because they don’t care. They just want they want money, they just want to invest. So but any event like, yeah, we can go through the securities. And so I mean, I would just say the what was it? Yeah, subscription agreements.

Speaker2: [00:45:35] And be. Yeah, and would that be the PM?

Speaker1: [00:45:44] Yeah, I like, you know, I like kind of separating these two ideas because. So the subscription agreement, that’s the agreement that the service had to turn that up. So, yeah, no, this is the agreement that and you’re based in America. So it makes it very easy. This is the agreement that somebody and we will send one over to after this call. But this is an agreement that somebody gets together. This is the thing that the investor signs. It talks about the exemptions that the investor would qualify for. And depending on if it’s five or six B or C, then either there’s a questionnaire or there is not. And then, you know, after this, this is pretty much the most critical thing. The PBM or the OLM or the offering memorandum. So this one is a bit tricky. So. So this one’s a bit strange. There may be cases, and so please don’t quote me on this because it’s not a legal opinion, but there may be cases where, yeah, there may be cases where because I’ve seen deals that don’t have PMS and I’ve seen securities lawyers that have like I’ve seen a securities lawyer that’s through sending us this was a securities lawyer and he was working on a deal with. He’s a co-founder of American Idol and he was working on trans. Transaction. He used to be a securities lawyer. He didn’t have a pimp. He just had the subscription agreements because he just focused on the minimum things that are required. And then he just filed with Edgar, and that was it. So I think the PM thing is really important.

Speaker2: [00:47:20] What followed what, Edgar?

Speaker1: [00:47:24] Yeah, this is the this is the EDGAR filing process we will show you, we have the entire process written down, but this is the thing that they sign to put the money and then agree to. And then all those things are reported in EDGAR, and the PM is more of a long document that explains all of the risks and risks.

Speaker2: [00:47:42] Can you just say in risk there was type? Maybe parentheses defines the risk or some?

Speaker1: [00:47:50] Yes, finds the risks.

Speaker2: [00:47:55] Cool. And then the subscriptions just allowing them to subscribe to the fund. And I had a question on this, Matthew. So back when I get soft commitment. Um. So I know sometimes we have to verify investors because you’re required to do so right. Um, depending on your type of fund you’re setting up. So if I’m doing fine, if they subscribe, let’s say, I don’t know, because this might be in my experience with investors. If if the investor says, Hey, listen, I’m in on that deal, I’ll put up the five hundred thousand or five thousand of my money towards that. Ok. And then. So then you come back, maybe two weeks later with the documents or you’re ready to close the deal or something. There are many cases that have happened that you said, Oh, well, I changed my mind. Right? And even though they may have signed some document, then either I got to pursue them legally right or just move on. You know, so I just wondered if if you could shed some light on that, like how legally binding is this stuff? And then what? So someone, uh, someone said that they would charge a subscription fee, which is at risk if they don’t, if they don’t follow through. Oops.

Speaker1: [00:49:31] I’m still here. I’m just getting that. Yep, go on.

Speaker2: [00:49:35] Yeah. So they would charge a subscription fee, which is at risk if they don’t, if they don’t fund. And I was wondering what your thoughts are on that.

Speaker1: [00:49:48] So you’re saying that there was a deal that the entire subscription agreement and the transaction would be at risk if the investor did not complete the transaction as they promised?

Speaker2: [00:49:58] No. So let’s suppose the fund was raised in, you know, $500000 as minimum commitments towards some, some some fund, right? And an investor said, Yeah, I’m in and subscribed them, you know, and basically did a soft commitment, verbal commitment or even an email or something. But when it came time to actually fund or there was a capital call and they did not fund, like what recourse would would I, as a fund manager, have first question? The second question is I have I’ve heard of others. I don’t know if they ended up doing this, but they wanted to have a subscription fee. So let’s say $10000 or $5000 or whatever which is at risk. It’s held in escrow and is at risk if that that fund, fund or investor does not fund when there is a capital call. Oh. So. Just because in in real estate, Matthew, what often happens, everyone has money until it’s time to write a check and then sometimes maybe the loan fell through that they were looking to get or whatever it is and they can’t fund. And then the deal isn’t close, right? So the same thing can happen with a fund. So I was just wondering how that would work or whatnot.

Speaker1: [00:51:29] I think, yeah, I think when it comes to that, it’s brilliant to one. When it comes to larger transactions and, you know, things are just from a compliance point of view, it seems that the focus is always on protecting the investor. So it looks like all of the things when it comes to the Oh. If you don’t, if you don’t pay, then this punishment happens. Yeah, it seems that it would be enforceable and so on. But like the Securities Commission, they’re always on the other extreme of protecting the investor. Yes. Yes. This has a bias. And so I don’t think the Securities Commission or anything like that would be they wouldn’t really be excited about. I mean, if you were if somebody were to whistle blow that or anything there just as a principle or principles point of view, because a lot of these guys, from a compliance point of view, are more principles driven rather than like specifically driven on specific words, meaning that they can change everything and everything is great. The point is that on the other extreme, so I think you can’t depend on them when it comes to the other problem happening of investors defaulting. But I think two things one is the terms of the subscription agreements and looking at creating something when it comes to the portion about the closing of the subscription agreement because, you know, here’s some sample literature on one of our members is using and they’re going to be getting some final legal review of this. But. Um, yeah. Simply put, I mean, yeah, you can make a punishment here, and it’s just creating another things that the investor is to be delivered or is to like you can say that Oh. You know, when these moneys touch escrow here, here is the amount that your risk here’s a 10 percent down payment and then the investor risks losing all of this

Speaker2: [00:53:17] At the moment, I like a 10 percent down payment subscribes you in and kind of honestly, it’s consideration, its consideration because we made a deal. We don’t want you to renege on a deal. If you if you reneged on the deal, I’m screwed because I can’t close. I made promises on my end. But you, you know, you get away scot free right now. Normally, I think that clause would be at the at the fund manager sole discretion, right? So then I have the ability to decide not to enforce that. Maybe I want to preserve the relationship for the future or maybe I just have a backup investor that I’ll just move along to. You know what I mean?

Speaker1: [00:53:59] Yeah, actually potentially. But check this out, too, because you may be able to. I mean, it’d be interesting if you can actually issue the sale of securities right at deposits. That would be fascinating, because then you’ve already you can already say, Oh, you know, you’ve locked in or you’ve given some form of security to the person based on the down payments alone. So that would be really interesting because, yeah, because then then you would give them something that they’ve paid for and then in the terms of the types of units that they’ve got and maybe it’s like, who knows, if you really want to go deep into this, you can make another class of units. This is really experimental, and this is just something from first principles that we’re coming up with right now. But just as an idea, because then it’s like, OK, are you?

Speaker2: [00:54:44] Are you sharing something in your screen? Or I’m seeing one page, but I don’t know if you’re pointing something else.

Speaker1: [00:54:51] Oh no. So this is the delivery by company and delivery by investors. He was production. Yeah, because. Yeah, because what could be interesting is like if they actually if instead of it being like a middle men or middle thing, if you can actually just sell them securities right away, then you’ve already sold securities. Then it locks them in and they’ve already had that commitment. So that may be a good way to kind of skip all the BS, and that could be one approach. The second approach would just be to forget completely about them and then just put all your energy just getting more investments. Yeah, because that’s what I mean raises our car. I mean, whenever we talk to people and if somebody is not fit, we just move on to the next person instantly because we feel like as if our energy is best spent getting more people in. Right. I think a combination of both. I think somebody is either in it or out, and that may be a good way to do it because if the securities have been sold, then you have the Securities Commission on your side saying that, Oh, this person agreed that was a fair deal, then then it’s like a full deal. It’s not some middle type of thing where it’s like somebody defaulted. I hope that brings some clarity.

Speaker2: [00:56:06] Yes, absolutely. I was just checking some, some documents I may have here to see what it is. The. Yeah, they actually look at the subscription box example here. To really get that anyway. Um, yeah. Okay, so I’m looking at the sub docs that I happen to have. Let’s see here. Just to just to see what it looks like.

Speaker1: [00:56:44] On open. We have many so maybe the one that is more and more up to date.

Speaker2: [00:56:52] Ok. Sure, no problem, OK. Yeah, I put it this way because I’ve never subscribed the investor yet, I hadn’t even gotten to that point yet. So all good. Yep, no, no worries.

Speaker1: [00:57:05] And tell you what, I think the subscription agreement is possibly way more important, like it seems to be around the PM. The PM is very important and it’s prestigious. But I’ve seen I’ve seen cases where it wasn’t. It wasn’t something that was part of this discussion. So I think too many people focus on the PM as a generality and not enough people just focus on the bare minimums, which is the subscription agreement.

Speaker2: [00:57:29] Yeah, sweet. Ok, cool. And Manuel. You know, I can keep going if you want me to.

Speaker1: [00:57:38] Yeah, let’s see, we have. What I mean, we blocked out Sue for two hours, so I mean, we can keep on going if we need.

Speaker2: [00:57:46] Yeah, yeah. Yes, please. I would love to.

Speaker1: [00:57:48] We just we just have one other person here as well. But I mean, obviously, raise your hand if you have any questions, but some people like listening back. So let’s continue.

Speaker2: [00:57:57] Ok, so, so on the financing documents the securities is the are those two things, right? The PM as well as a sub agreement.

Speaker1: [00:58:11] Yes.

Speaker2: [00:58:12] Okay. The financial docs, what what is that?

Speaker1: [00:58:18] Yeah, good question. So these are the documents, and I think it went through this group. Another member, actually, but basically somebody has invested or if somebody has transacted before, then that is just those are just the documents of that. For example, one of these one of these funders, they asked for a family office to be on the cap table of a dealer prior to me even looking at it. And so what they would see, they would open a deal with that and then they’ll say, Oh, this family office invested at this time. So any time any company has gotten debts already, there is a past investor in a deal. You know, it just brings that story and just proof of those past stories actually happening. So past investors.

Speaker2: [00:59:02] Ok. Ok. Yeah. So. Most investors are basically the this is this essentially is the money that the fund has, right?

Speaker1: [00:59:16] Partially because I mean, the money that the fund has, I mean, it depends on the type of financial statement, but

Speaker2: [00:59:23] From an investor, I know of the actual investors, right?

Speaker1: [00:59:27] Yes.

Speaker2: [00:59:29] Yeah. I mean, not investors. The dupes, I guess. Yes. Yeah. Okay. Excellent. Ok.

Speaker1: [00:59:40] Ok, and then financial statements, I mean, we know what these are just to all the typical financial statements. Cash flow statement, balance sheet, all that good stuff.

Speaker2: [00:59:51] Yeah. Financial statements, balance sheet tax returns, I guess.

Speaker1: [00:59:56] Yes, and I mean.

Speaker2: [00:59:58] So would you say CMB have some overlap there? Basically just, you know, these these funds would want the financial documents because they want to know what, what situation they’re getting into, right?

Speaker1: [01:00:12] Yeah, it seems that’s the case, because this deal, this data room was obviously from a software deal and because they raise some equity in the past and some debts, and so they wanted to separate it.

Speaker2: [01:00:23] Excellent. Excellent. Yeah.

Speaker1: [01:00:26] This was more on the focus on the current story, so to speak.

Speaker2: [01:00:30] Right, right. Ok. Um, let’s see. Customers. Um. I don’t think that applies to me, but okay. Yeah. For real estate, anyway. Tax. With my tax liabilities, I don’t think that applies, either. Employee and director issues. One thing that applies, really,

Speaker1: [01:01:09] Yeah, this is this, this is one that’s just when people like, let’s say somebody bought somebody out there, somebody was part of a company and they

Speaker2: [01:01:15] Left. Yeah, yeah. So exhaustive list or, you know, property leases. I don’t think that that. Not a place. Funny enough, yeah. Contracts and arrangements. Yeah, I think this would apply this this is just any probably existing commitments, I suppose. Contractual obligations.

Speaker1: [01:01:44] Yeah, I mean, it seems critical for especially the second way the. Where we might be.

Speaker2: [01:01:50] Yep. Ok, so that’s just any that’s kind of self-explanatory.

[01:01:56] Yeah. Mm hmm. Okay, cool.

Speaker2: [01:02:04] Know receivables inventories from transaction with officers, licenses, intellectual property. Ok. Yeah, I see that. I think that all make sense.

Speaker1: [01:02:18] One quick mistake. So when I said past transactions or past people buying people out, that’s actually this one. So transaction? Okay. That’s one thing that makes up this. Okay. Ok. And then all the details are in here, but yeah, we’ll obviously send you a note with the updated sample subscription agreement and then,

Speaker2: [01:02:45] Oh, is there is there a way for me to get it right now from the online portal?

Speaker1: [01:02:49] Yep, I mean, of course, this is this thing, and this one takes you to. General.

Speaker2: [01:03:03] Or just quick, quick. Oh, come on. Oh yeah, yeah, I did see this. Okay, got it. Got it. I think of it. I didn’t see this. But yeah, cool.

Speaker1: [01:03:13] No worries. There are some samples here as well, kind of America and whatever.

Speaker2: [01:03:19] So what do I do? I go. I go ahead and populate that stuff up there in that in my portal.

Speaker1: [01:03:26] Exactly. And then anything that you don’t have, we will try to put it something together. If you need any deals underwritten or anything, we can take care of that as well or any and all that.

Speaker2: [01:03:37] Yeah. It would be great if you can send that email just so I don’t have to type it out,

Speaker1: [01:03:43] And the final thing is the broker dealer because sometimes I mean, you may choose to engage a broker dealer. You don’t have to, obviously. Sometimes I don’t actually. But you know, if you do, then there’s like some people just say, Oh, you know, here are the broker dealers that are working. It’s yeah.

Speaker2: [01:04:09] All right. Ok, so that’s the data room, so let’s just say are my core, I get all that put together. Generally speaking, but um, there is a little bit of a I mean, I have an idea of what I can offer in my fund, but maybe I. Probably one way is to investigate some other funds and what they do similarly or what they what they offer, if you will. Yes.

Speaker1: [01:04:39] Yeah. Yes, I mean, that’s pretty, yeah, because we don’t want to we don’t want to waste too much time like being stuck in a data remote and going too deep into that. So it’s good the way that you’re looking at different structures before you rigidly commit to only one and then investors just say no or they say, I want a different structure. So. Yeah, and I’d also also consider things that you’d like to optimize for, because it’s because this is the deal that you’re doing, so it’s like whether it be just a probability of it closing quickly. What types of structures are more amenable to that? Or if it’s just, oh, if you don’t care about the time, then what do you think would reflect the longer term strategy? It’s really based on some of your goals when you’re raising capital here at the end of the day.

Speaker2: [01:05:27] Yeah. Yeah. That’s. Um. Mm-hmm. So, okay, all right, so let’s say I. Typekit. Okay. Let’s say I was um, I was able to get it all put together like which, which I think it’s pretty reasonable, although. Although the sub docks, yeah, I guess I have a template sub doc now, I presume a fund may, may want to change it or they may have comments on it after they review it legally.

Speaker1: [01:06:12] Right.

Speaker2: [01:06:14] Interesting that that sometimes happens.

Speaker1: [01:06:17] Yeah, it can. That’s, you know, that’s interesting, because the one thing is like we see like the bigger like AB ad and some of the other members, they wanted to do funds. It depends on the investor, so if it’s a large check investor, then then they just wants everything to run by their rules and their due diligence and so on. But I mean, the fact that these subscription agreements and all that would be ready, that would be expected. And if they see that, then it will bring them a lot of confidence that the person is a serious they’re serious to work with. So, so that’s why more advice. That’s why I’m kind of apprehensive about. I’m apprehensive about just, you know, spending like a few hundred grand on somebody to do. I don’t really I’m really apprehensive about that because. Things change, so I just get a simple, you know, keep everything simple and to the point and just put in the terms, you know, you may have some accountants to help you on. Like, we can help you on terms as well. Like these if they can help you on that, but I’d be really just flexible with the markets. Okay. Yeah. Yeah. And something else that you may consider sometimes like when you actually reach out to the investors and so on and you have those initial calls, sometimes they may even tell you what they want prior to you sending over the data. And so just from a sales perspective, it may be better to just send them exactly what they want. If they just talk about, Oh, we hate, we hate, we hate housing, we just love. We love free shovel ready. And maybe, you know you’re just giving people what they are.

Speaker2: [01:07:59] So let me ask you, so no, no, let’s say, OK, I’ve I’m looking at the steps there. Four steps, in essence, right? So I’ve prepared my data room. I got it all situated. You know, I put together some stuff and now I go two to three, which is week two, which is what I should be doing now. And I said, Okay. But there are several steps there, there’s strategic global programmatic strategy, which is global pragmatic compliance with securities law. Capital introductions and feelers. Their strategy tactics, so on. I don’t know if you can walk, walk me to that set of stuff a little bit. Just hit the highlights, if you will.

Speaker1: [01:08:45] Yeah, sure. Sure, we’ll do.

Speaker2: [01:08:46] Oh, well, I guess my question really is, do I have a feeling I have one friend that may have used you guys before? This is probably might not. It might have been called something else occurred here. But my friend Richard Rich was his last. I can’t remember. But Rich, he’s based in Orlando, he mentioned, because they did pretty well. They raised about over 10 million dollars. The goal was 10 million. They did pretty well, raised it. And he had mentioned use service, but he didn’t say what it was at the time. So anyway. So what would be the steps for me to actually get introduced or introduce myself or my fund to investors and so on and then go from there?

Speaker1: [01:09:37] Yep, absolutely. Is this one where the rich Rich Sanchez or

Speaker2: [01:09:42] Yeah, Rich Sanchez,

Speaker1: [01:09:44] Oh, rich Sanchez. Yeah, so so some people so about about that, some people, they they go into WhatsApp groups, right? So we have a lot of people doing the WhatsApp groups. So then they get more guests, but they actually they’re not actually people that have paid and have actually use the service. So some people, they go into WhatsApp groups and from there, but there may be some awareness. But in any event, the way that works is. The let’s see so this is to make sure that when people are reaching out, they are doing it in a way that is compliance. So the point is like. Let’s see. Where we go through here. Yeah, the point is when we reach in, when people reach out is to make sure that they don’t see the terms of the transaction, they keep everything at a high level so that they’re not breaching securities laws because, you know, when people are making the script to the emails that are being sent out and so on is just to understand that, you know, some people, you have to make people just make sure that people are accredited, not if they’re they must be accredited. And if you’re not sure if they’re accredited, just best to just talk on the phone and not say the terms of the deal or else there’s a small risk of breaching securities laws. So that’s a point of that parts. And everything else, so introductions and feelers. Because this is two gets introduced via email to correspondence that we have to get their feedback on the transaction. And so these. The purpose is to get connected with people that we’ve known or we close deals with in the past so that it’s not a cold outreach. And the reason for this is just to say, Oh, you know, here’s what this person likes. In your case, it would be more. Let’s see. And real estate, yeah, real estate, yeah, this one is really good, for example, for U.S. and Canadian real estate. And then based on his opinion, it can help you direct the conversation as there’s a broader outreach.

Speaker2: [01:11:45] Okay, so so I missed the part there so I can go back one. Yep, up here. So then there was there was compliance. You follow you on that. And then the introduction feelers. This is where we work with a VA to get introduced, right?

Speaker1: [01:12:06] Nope. Not even yet. This is just is this a manual? It’s like a manual type of introduction. Ok.

Speaker2: [01:12:14] So, oh, so so that’s basically I feel out some information, and it kind of gives me it probably introduces me to the people that you guys have or.

Speaker1: [01:12:25] Exactly. We know. And then after that broad campaign, this one is where so here is where we get the broad campaign set up. So some people, they choose to use base, and that’s fine. Some people, they don’t, and that’s fine too. So the point is somebody wants to start doing it more aggressively. They hired a VAS, and then they follow all the standard operating procedures that we have to do the outreach. Yeah, I think for you, you because it’s a U.S. real estate, I mean, there’s no magic here. There will be there will likely to be a lot of replies. And what else would? Soon after the outreach. Yet then you can just get the context directly here, the list of all the context we’re actually building and updates should be at life before like sometime in January, where, yeah, we’ll put the context in easy to see way, but these are just Google spreadsheets. And here it is. Standard operating procedure is that the VA’s follow as well, as well as warning people on scam investors and lenders. And because no matter because the thing is like, even if you vet and do due diligence and then there are ways of doing due diligence between delegate, there’s still a risk. There’s always a risk. So we have to tell people about that for attorneys and escrows for closing the transaction.

Speaker1: [01:13:44] We have a few ways. We have a few introductions we can make to escrow companies. We just recommend. I mean, there’s I mean, you’ve been in real estate, but there’s one that’s real cheap. It’s just 200 bucks, and they can set up a compliant legal escrow and everything. You know, for subscription agreement review, we have one that’s really good. Or, you know, for people that are doing more complicated setups like reach that needed a fund administrator. And they don’t want to do any of that themselves. They have no in-house team. They want to get fund administration set up through and through. Attorney one is for that. And that seems to be the main parts of this story here. And then obviously finally just closing the actual wreck. Many people just confide in a lawyer, but this just walks through like how to do it on Edgar and everything. Like, it’s all open because many people say that, oh, a lawyer needs to do it, which is true from a safety point of view, but it’s security commission. They already openly discussed how to do it, and so we just actually file like an actual read be just for like a demo one and we just show you step by step like how to actually do it. No, and all that good stuff.

Speaker2: [01:14:53] So. Hmm. Got it, so. So this is great not to I mean, really, really kind of. I mean, really? I mean, you know, in real estate, they have the term DIY. Do it yourself. This is really this is seems very do it yourself, you know, except except we’re not doing it ourselves. But what I mean is I’m not hiring, you know? That is. I mean, raising funds is is not that complicated in terms of steps. It just is made, I guess, because it’s not a site, they don’t teach it in school per say, right? So you can’t just go learn it. You know, so now it’s cool. So. Yeah, I guess I just got to continue on putting together some of my deals, getting packages up a little bit nicer, get in my numbers a little bit tighter and then just go through the process. Did I have any other questions? In terms of process here. I. So I have a well, we haven’t really decided to be business partners yet. He was I’m kind of under Operation Sight, so I’m going to do land development. I’m engineer and do construction and stuff. And I was hoping he would be my capital raiser, if you will, right? And he has people that he can, you know, he’s a doctor.

Speaker2: [01:16:35] Yes, doctor contacts and whatnot. So I think this is something that could be very interesting to him for his own knowledge per seat. Question for you. Hmm. Do you? My fund, my funds are, you know, the home building. And then there’s five or six C and five B. Um, and there is also an exemption for real estate as well. I think it’s four c five. I don’t know if for the forty five. Real estate. I think I’m just going to search Real. The exemption. This. Three five, see, I was kind of close. Yeah, this is this is for us stuff. And it basically says that. It basically had some discussion that because real estate policy. It is not a security then. Um, but they invest more in in real property than in some cases. It can be exempt from from existing compliance. So, but it’s one of these things where the SEC is very. You know, they don’t define all the terms, so it’s three left to you to make a decision. And yeah, so so anyway, that aside. For funds like mine, would you say if I go six B or five or six C, says B, if I yeah.

Speaker1: [01:18:50] Now, look, good question, so. I look at the well, the five or six seas, it seems to be less work because if I remember correctly that one where you don’t even have to have an investor question there. So, right, I do the one I do, the one with less work and and plus the I guess the advantage of doing the B may be that in effect that you have to validate investors and then there’s a small amount of quote unquote unaccredited investors that may be able to participate, then it may be if it’s a small check investor type of thing. So. So the answer is if small check investors or quote unquote less sophisticated investors are the types of investors that would be more persuaded to partake in the deal, then it may make more sense to do to be because, you know, because then the deal because the deal needs to get done one way or another. So.

Speaker2: [01:19:44] Well, yeah, the way I look at it, though, and I it took me a little while to keep remembering the B. I think of B being like B come before C, so b is like more junior. So the thing about B is that technically you’re not allowed to generally solicit no journalist soliciting or advertising to market the securities. But I was going to argue, well, I was going to research it more that if real estate is not traditionally defined as a security. Um, and I don’t know if if when you’re when you’re basically have an investor hold a note against the collateral, then it’s not a security, you know, it’s more like an investment, then maybe that’s that’s the thing with real estate, but with five or six b. I’m not allowed to generally solicit all things being equal. So, um, and then there are some limitations on the number of non accredited investors. So basically five or six B will target accredited investors, which is investors over. Over one making two hundred k per year in the last two tax returns or having more than one million net worth, I believe something like that. But anyway, regardless, the question is so when we’re when we’re reaching out to investors via your portal. Um, would I be essentially? Offering security.

Speaker1: [01:21:35] Yeah, good question. So the main the last question you asked. It sounds like the most important one.

Speaker2: [01:21:40] Yeah. Yeah.

Speaker1: [01:21:43] Yes and no. So no, in the sense of a lot of the introductions would be. So a lot of introductions to be, oh, what do you invest in, what types of things do you? It’s really great, but the point is is more so the introductions and more to get an understanding of how the other business works. Right? That’s number one. Number two, quote an offering of securities generally seems to be something that can be tracked when it comes to putting it in, writing when it comes to communication. So if you were to say, Oh, here’s this deal, you get this much this many units in the LP. This is the rates. This is what you get. You probably see this a lot in Facebook anyway, but a lot of those, it seems like a lot of people just break the rules. So it’s like. Let me just write an example, it’s kind of like saying, oh, you know, you get X units and it’s like sending a term sheet to somebody essentially who isn’t it? You get X units for X amounts. And it’s closing date. Um. This yield is just talking about the terms of the deal without you, actually. So it’s like when you write these down and then you you say, Hey, here’s a deal, and here’s how you invest. So something like this, even if you say the numbers do this, then yeah, somebody can points to that, especially if it’s written down and say, Oh, that’s an offering of securities, and then you attach a subscription or you attach like, send it to this bank account.

Speaker1: [01:23:20] So that seems to be an offering of securities. So in literal sense, so if you were to not do that, then technically you won’t be because there is no proof of it and it can’t be substantiated that you offer that security. So that’s why a lot of the conversations that we tell people to have when it comes to compliance is to just keep everything really vague because the goal is to get people on the phone call and then after the people go in the phone call and. To discuss to discuss them, what do you do, whatever, what types of what does your company work? And then after that then to offer them the securities, after the India, after you validate that they’re an accredited investor. So because typically in the first email, we don’t. Some people do it, but we usually don’t advise people to do this unless are 100 percent sure that they want to see that one and number two that they are accredited to. Ok. I think I think that kind of makes I think that kind of answers a question because I think the point is like, Yeah, you do, but

Speaker2: [01:24:17] I got it. It’s it’s more not. You can’t advertise. Well, first

[01:24:22] Of. So again. Think you can offer?

Speaker1: [01:24:38] Hello, that’s me. Ok, so I see your speakers. Your microphone is producing sound, I don’t know if it’s me or you. Ok, so it seems that my side is good. Hello. There we go. I can hear you.

Speaker2: [01:25:16] Yes. Yes. Ok, so. Sorry about that. Oh, yeah, I like what you’re saying because it makes 100 percent sense, I suppose if I were a hedge fund, you know, like trading stocks. I have to say that I am going to be doing a. I’m going to trade stocks, I’m offering a 20 percent return and invest here. Right. Therefore, I’m offering a security publicly. In my case, I’m saying we have these wonderful houses that we build and we’ve put together a fund for it and we’re exploring. We’re looking for investors to invest with us. That’s all I see. And then. So and then when we get to speaking, then, then I can probably see that, then I can I can discuss the project. You know, so.

Speaker1: [01:26:31] Exactly. Here’s an example. Yeah, because I mean, here’s an example. Transaction, this was like part of a company I was a part of, but they just say, Oh, if you. If you want to learn more or if you’re an accredited investor who wants to learn more about how you can become a part of this, here’s how you. Here’s a call of action. And if you talk to ED eight, he has, I mean, a lot of people that they have these websites where they say, Oh, if you’re if you’re not an investor, then just basically just look away. It’s kind of like, you know, this is an inappropriate website if you’re not an accredited investor. Close your eyes and then it continue to show the terms so. So that’s that’s another way of doing it. Basically, it’s like if you take any reasonable steps to show that you’re an accredited investor. And then typically it’s like if you do talk about things like and then a lot of the disclaimers that you see in the pitch deck saying that, oh, this is just for informational purposes. This is not for anyone who is who’s accredited. Sometimes that can be useful, too, because then because sometimes you have no control over where these documents can go when you start selling your deal. So people just use this great disclaimers and say, Hey, you know, we don’t know like this is just for informational purposes similar to what Razer is doing right now, because we don’t know what people are going to do and what we’re telling them. We can only do diligence to a certain extent. So we just say this is just for informational purposes. But if you use this to fund al-Qaida, it’s none of our business. So that’s really the winds of this. And if you look at the call, the action, it’s like a call to action. Less energy. Yeah. Now you get the idea to invest, you do X. Um, and so there’ll be a link somewhere to where to invest.

Speaker2: [01:28:21] Yeah, well, there was one other thing I had heard that. That the general solicitation rule. They had, as Jesse has said, that if you have a relationship with these people for more than a month, you can solicit. Right, because because the the key word is no general solicitation doesn’t say you can’t solicit, it’s just no general solicitation. So and they came back, they came and said, Well, you know, general, what is general solicitation? Well, if you have a relationship with these people for at least a month or so, you know, then you can then you can think. But I’ve also been told that if you if you. Kind of. I mean, it’s obviously it’s hard to enforce. And it really comes down to how how, um, you know, if you misbehave and you go to some type of audit or some investor complains, that’s kind of when it becomes an issue. Right? I mean, you shouldn’t go about setting out to do it nevertheless. But but also, I mean, it’s not really like a really thin red line that if you if you cross over and once you’re in trouble forever, you know, so.

Speaker1: [01:29:50] Exactly. That’s what that’s what they say when they say principles based. And it also shows like that’s why somebody is trying to get insurance if they have a commercial mortgage brokerage or a broker dealer and they’re getting indemnity insurance. That’s why those are the cases where probably the insurance wouldn’t be that useful because you haven’t really done what you’re supposed to do. So it’s really to protect against the lawsuits, really at the end of the day, and lawsuits do happen.

Speaker2: [01:30:14] So, yeah, yeah. Well, cool, man. Sounds like I just need to go ahead and go to this. This information put together a fund, but I’m really interested in kind of getting the word out because and I do think we have some good deals. I mean, we got deals with three x multipliers and those type of things, you know? So any any thoughts or feedback on just that part, like, you know, what type of funds or whatever I should kind of target for my my stuff?

Speaker1: [01:30:49] Yeah, no good question. So from the perspective of I can only speak from my perspective and I think it comes from the two things, one is I think it’s just. Finding the number one simplest way to know what investors want at a grassroots level so that we can know what the cause effect relationships are to what types of deals that they’re funding, so that we can only change one thing in the system at a time to know what causes what investors say, what for what reason, so that we can kind of debug and troubleshoot the capillaries, so to speak. So my point is like as long as we come up with a really simple offer that. Optimizes for the end goal of your capital raise, and I really recommend to meditate on the goal that you’re looking for in a capital raise and then align the structure based on the goal and also based on how we can quickly get the investor feedback. So that’s just the that’s the overall thing. And then specifically, I would probably just like I mean, I don’t really come for any magic. I’d probably look at LPG and and talk to the CFA’s, who can also handle some of the financial aspects that I may be missing right now. Altogether, triangulating with the with everyone else, then we can come up together with the strategy that makes the most amount of sense. As long as we don’t spend too much time doing it and we can actually get to the markets and get results, so.

Speaker2: [01:32:16] Absolutely. Yeah. So cool. Hate not to. So these calls, right? These are calls. I think I think there are every week, right?

Speaker1: [01:32:30] Exactly. There are every week, Monday at six p.m., Wednesday at 11 a.m.. And, yeah, they’re every week, except for the holiday coming up.

Speaker2: [01:32:43] Ok, so all right. I don’t think I booked the one on Monday yet. I might just go ahead and do that just in case you know things sometimes, but hopefully very quickly we’ll be off to the races here and I won’t require too much of your time, I guess.

Speaker1: [01:33:04] And it’s not a problem, that’s why we’re here.

Speaker2: [01:33:07] Yeah, I was I was going to ask you. So my my business partner, that needs to. Oh, question. You know, there are some programs like Founder’s Suite and whatnot for CRM and whatnot, you know?

Speaker1: [01:33:23] Yes.

Speaker2: [01:33:24] And I was wondering if you guys had any intent to do any of that type of stuff like build that into your your your thing here because, you know, when I start to onboard investors, I don’t know if I’ll be doing it. Would I be doing it through your portal or would that be basically separately?

Speaker1: [01:33:45] Oh, good question. So currently so currently,

Speaker2: [01:33:49] We

Speaker1: [01:33:51] Focus on helping people get to the investors in the most simple way possible, meaning that the only thing that we see that matters is if they’re wiring cheques to their subscription documents and signing that cheques to the escrow. That’s what we focus on. So what we do is just track the outreach via getting the assistance to do it via Zelle and would use. We just use Chrome extensions like simple tools like either gas or soon to call in the calling software just to track what’s going on. So we’ll track and then that’s it’s what we plan to do is to help people get everyone to get their own custom URL. So raises our comp slash, for example, bass or whatever you would like. And that can be like a personal profile where just for informational purposes, people can view what somebody is working on and then they can contact them in whatever way they think is best. So that’s what we want to get set up in the next few weeks.

Speaker2: [01:34:48] Yeah, I don’t know. I just, you know, being a kind of entrepreneurial kind of buff, if you will. I see that one thing that could happen on your end is I come on to the program. I have a good fund. I have a good potential. And then I go ahead and get some capital raise. Well, what happens is at that point, I transition out of raises, perhaps right, and use some other CRM to to manage the relationship. But if I am, if I’m able to sort of kind of do it to to raise adcom or to some relationship there is with that is then raised, I can get that residual income, you know, because because I might end up going, who knows, I might end up going and work with invest or something, right? Just to manage just a CRM to manage and give onboarded investors updates, and I’m going to pay them a certain subscription fee. So, so that subscription fee could be captured now, of course, at that point, you have to get into the the software business, which I don’t know if you want to be in. So but I just I just kind of chilling that kind of thought process up to you. Any thoughts, thoughts on that?

Speaker1: [01:36:16] I do have some thoughts. One of my thoughts are that’s something we want to get into more, more later on. And it is part of the the thing is like, we feel like a lot of the a lot of the real estate investors that are working on transactions. Many of them use Juniper invested and all this. And because the market is already there and it’s like people just seem to just want the money. So that’s why we just settled on, quote unquote, people who want the money and people who want to prepare to get the money because, you know, don’t seem to be more tools that, yeah, we can build and we can take their market share.

Speaker2: [01:36:51] But yeah,

Speaker1: [01:36:53] Because because for us to build that out is not something that’s happening in the next month. Not that soon. But yeah, it’s essentially happened in the next year.

Speaker2: [01:37:02] Okay. Okay. No, no. It makes it makes sense. You right now you have sort of like a blue ocean because I could tell you I’m not in like every single mastermind there is in funding funds, but I would say I’m around enough of them that I do think that, you know, learning the learning part is good. There are a lot of stuff that has good information and there’s a process. But I do think what you define, I mean, you basically are providing a back end. To the fund manager, I mean, it is what you’re doing, you say you want to do with the self serve in investment banking, so no, I don’t have to go and hire a V8 team or train assistant to go and find the right investor because one of the things that I like to do in all my businesses up to this point is I don’t like to market, if you will. It’s kind of a weird thought. Here’s my general thought I don’t like to market because I prefer to do good work. And organically develop a clientele, you know, and that has worked well for me. Maybe. Maybe marketing does have a place, but I kind of like where instead of. Pitch in random investors, if you will, right? Kind of have kind of funneled investors a little bit towards me, so they they already are introduced and like like a little bit. So when they’re coming towards me, it’s a little bit of a warmly, you know, rather than because that’s what I saw as a hurdle. I was sitting there and I had all these potential avenues to explore to go, try to get funding. But all of them are cold leads, you know? And I felt like my experience with rich people is that they tend to hold on to their money a little bit tight. You know, if they if they if they weren’t like that, they probably won’t be rich people. So, yeah, you know. Yeah. So so I have a little interested. At least what we have going on at least allows for things anyway. Worth a shot, right?

Speaker1: [01:39:19] It is. It is. Two final thoughts here. I mean, one is the. With respect to your your bias towards focusing on having good results, good quote unquote products and having people come to you. I mean, the small tech investors may be something that you want to look at because they seem to be really swayed. And their cost per acquisition is very cheap compared to a more sophisticated large tranche investment. So that’s something I may want to consider for one, I guess, just smaller, small, smaller investors. So they’re they’re really easy to persuade relative to bigger investors as a generality based on what you so I mean, based on what the fact that you like people could come to you. The small tech investors typically go to things rather than Big Tech investors, people going to them

Speaker2: [01:40:06] As a project. Okay. Okay. Good point. I mean, I guess I’m just saying, generally speaking with business, I’ll be able to carve up my little area and create kind of a little reputation that brings, brings leads to me, you know? But I take your point, yeah, I take your point that sometimes it’s not really going to work like that because I may not have that reputation just yet. Oh, I see. In the fun speech, you know?

Speaker1: [01:40:37] One step at a time. Is that right? Yeah, I guess in terms of our plan, I mean, the most asymmetric way for us to quote unquote add value and hence make money is really from helping people close transactions through the people who we have relationships with. So that’s really the main focus because I mean, residual income is great, but really is just focusing on helping people close your transactions and then that’s how we benefit the most.

Speaker2: [01:41:03] Jennifer, got it. So I’m going to go ahead and get some deals up on here. Exactly. Yeah, I got a whole bunch of real estate deals. I don’t even know if it needs to be one fund or multiple syndication. By the way, do you recommend syndications to your portal? It can work,

Speaker1: [01:41:24] They can work is just like the. Almost. Never, never one off transaction, one off transactions seem to work really well because if we just find one investor for one transaction that takes rather than syndicated to multiple parties, you see, like larger tech investors were really more used to that because those are the types of people who have the most data on. So that seems to be the best way. Probably speaking.

Speaker2: [01:41:51] So your your typical raise in terms of fund amount, which is basically the not to aim to actually raise is about 10 million, right?

Speaker1: [01:42:03] Yep, we’re doing yeah, the last one we’re working on is twenty five million on a on a UK based multifamily deadline. So things like that seem to move OK.

Speaker2: [01:42:15] All right. Got it. Sounds good. Sounds good to us. Appreciate that. Not too. What’s your what’s your background, if you don’t mind me asking?

Speaker1: [01:42:25] Background, we’re talking ethnic, so we’re talking ethnic people.

Speaker2: [01:42:30] Yeah, I’m from the Caribbean, so.

Speaker1: [01:42:32] Oh, really, it’s we’re in Trinidad and Tobago or we’re

Speaker2: [01:42:36] Where I was born in Guyana, grew up in Barbados and lived in Trinidad. Then I moved here. So.

Speaker1: [01:42:44] Oh, interesting.

Speaker2: [01:42:45] Yeah. Yeah.

Speaker1: [01:42:46] Ok. So I got some Liberia. Basically half Liberian genetics, half Nigerian genetics.

Speaker2: [01:42:52] Okay. Gotcha. Cool. Yeah, I was I was wondering because, you know, I just didn’t know, and I usually ask that stuff because I get asked it all the time because everyone assumes I’m Indian and I’m not. I don’t know a word of Indian anyways, man. Well, hey, thanks for your time. And uh, I will go ahead and check out some other things online here and then go from there.

Speaker1: [01:43:20] No worries. No worries. And cool. Do you have any any questions? I think you’re probably just standing by or. They are going to Zoom, No. But anyway, thank you, everyone. That’s pretty cool, and we’ll chat soon. Let’s work on it.

Speaker2: [01:43:37] Would you mind shooting me that email? Yes, sir. Yeah, thanks. Take care.

Speaker1: [01:43:42] Thank you. Bye bye.


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