Episode 113 – Unlock the Power of Events to Raise Capital for Your Syndication Deal

So just how do you find investors to get into your syndication deal? Or your investment fund? How do you find them out there? In this video, we’re going to talk about one of my absolute favorite ways to do it.

What is one of my favorite ways to bring people into an offering, whether it’s a syndication investment fund or whatever it is? It’s this: first, it works whether or not you’re doing Rule 506(c), so you can use it with a 506(c) for an offering where you can openly solicit from the general public, but you can only let in accredited investors who have been verified. It also works for Rule 506(b), for those who you already have a relationship with. I’m going to talk about how you do that with both in this video.

What is my favorite way? It all boils down to what the offering is, too, I should mention. If my offering has some sort of local component, or a lot of my investors are local, this is the way you do it: with events.

Now, you’re thinking about events, “Well, it’s you bring everybody into a room and you talk about your offering.” Almost, but not quite. If you say, “Hey, come to my event, I’m going to try and sell you why you should invest in my apartment building,” you’re never going to get anyone to show up. I’ve tried, trust me, no one shows up. What you need to do is get people there to an event for something a little bit different before you bring up the offering.

The first step in doing this is getting the word out that there is this event. The best tool I’ve found for this is, you know, certainly not letting everyone you know do it. But if you’re doing a Rule 506(c), where you can openly solicit people you don’t know, then it works well to do things like cold calling. Or if it’s a real estate deal and you have a relationship with a real estate company, have the agents talk about it. It’s something that they need to do anyway; they want to be talking to potential sellers of real estate, right? Well, there’s something for them to talk about.

Now, there’s a nuance here. Under 506(c), you cannot know anybody who’s coming to the event. And that’s okay. Under Rule 506(b), you can still invite people you don’t know. But here’s the thing: if you’re inviting people under a 506(b) offering, you can’t talk about the investment. What? Can’t talk about the investment? Well, that goes back to what the whole event is about.

The event itself should not be about your investment, even if you’re doing a 506(c) offering. The difference between them is at the very end of your presentations, you’re going to talk about your offering if you’re doing a 506(c) offering or if you know everybody in the room already. If you invite all of your friends over and do a pitch and do an event where you’re talking to everybody that way, that’s totally fine. You can certainly do that. But if you don’t know people who are going to be investing in it, and you want them to be investors, you don’t talk about the investment if it’s under Rule 506(b).

So you have this event, what exactly are you going to talk about? Make it something interesting, something that people would want to know about. If they all know that you’re in real estate, for example, talk about the real estate market and how it affects them. The market in general is oftentimes kind of interesting for investors.

Now, I spent some time in the commercial real estate world. So a lot of times, we would talk about things that were very applicable to commercial real estate people, whether that was energy efficiency, or talking about changes in legislation, or rent control, or things like that. Generally, those are very interesting topics for those kinds of people. Those were the people that I knew anyway.

If it was residential real estate, it might have to do with how their home values are going to be doing. You want to get them in the room, not because you’re pitching them to do the real estate side specifically, because we’re trying to syndicate, we’re trying to start an investment fund. Whatever you’re trying to do, you’re getting them in the room for something of value. So that they have a reason to be there in the first place, or do something that directly affects them that doesn’t have anything to do with it.

How is the economy right now? I’ve got an economist who’s come to talk about exactly where we should be. I’ve got a wealth manager who’s the wealth manager to the stars. And he’s going to talk about what opportunities in investing he sees in the market in order to maximize his client’s portfolio, and what you can do about it for you, because you’re probably interested in that, too.

Or the best one I’ve ever put together was we had a relationship with a Navy SEAL, an ex-Navy SEAL, who had just left the service and wanted to become a business consultant, and was starting to make talks and go around and do that. So it was a win-win: we gave him a platform in order to speak. And he got to put together a really interesting speech. And people just like Navy SEALs, it’s interesting. People like that sort of thing. Special Forces for the United States, hats off to them. They’re interesting, they have an interesting job, they defend us. So we’ve got an honorable component. And it’s something that draws people in.

I’m not saying go get a Navy SEAL or go get an Army Ranger. I’m saying find somebody who’s got something interesting to tell that’s somewhat aligned to what you’re going to be doing. And bring them in the room and have them be the star of the show. Because right now, you don’t actually want to be the star of the show. What you’re trying to do is get that introduction in. Think about the sales funnel; this is just the advertisement that overlays it. So the whole thing is about them. But really, for your purpose, you just want to get that advertisement in to make sure that people know about what you’re doing if it’s a Rule 506(c).

Now, what do we talk about if it’s not a 506(c), if it’s a 506(b) and we have people coming that we don’t know? Well, I would want to talk about investing in whatever. If your offering’s in real estate, if your offering’s in commodities, whatever it is, or Bitcoin or whatever it is that you’re putting together, talk about that in general. You’re not talking about your offering.

At the end of that presentation, you say, specifically, “Hey, I would love to get to know more of you. I’d really like to get to know you. So if you have anything, if you’re interested in this, let me know. I’d love to carry on the conversation with you in the next day or two.” And people will sign up, people will generally be interested because there’s no pressure. If they’re interested, they’ll still have that conversation.

Aha. Now, these are people who are moving from people you don’t know to people that you do know. And when they’re people that you do know, you can start selling them what your offering is, if it’s a 506(b). That’s how we build our network of people that we don’t know so that they become people that we do know.

Another little nuance on this is to partner with people. So people who are putting these things together oftentimes will bring in another person. I mentioned like a wealth manager; they’re great. If it’s in real estate, your title company a lot of times will also do this, will partner with you and contribute some dollars. They want the exposure, they want ad time, there’s plenty of room in this for everybody. So they can advertise essentially to this same audience. They get to spend money on their marketing dollars in a good way, you get to spend your marketing dollars in a good way. And the price is now half because you got another person there.

So use other people and partner with them in order to promote these types of events. And they’ll also bring in all the people they know and you’ll bring in all the people you know, and everybody wins across the board.

The most important thing is to put together a good event. So treat people well, make sure they have a good time, make sure they learn something and make sure that the conversation gets carried on. This is your opportunity to take all that you got from it. Because it may not feel like much when the lights go out at that event. But you now have more of a relationship than you did and you move them further down the sales cycle.

My name is Tilden Moschetti. I am a syndication attorney with the Moschetti Syndication Law Group. Our job is to help people just like you, syndicators, investment funds, businesses looking to raise money from either people that you know only or people that you don’t know under Regulation D Rule 506(b) and/or 506(c). If you’d like to talk to me about your offering and see what we can do for you, that would be fantastic. Visit us on our website or give us a call and we can set up a time to talk.