Key Takeaways
- Start with a soft commitment to gauge expected investment amounts and manage your internal raise pipeline.
- Provide all required legal documents early, including the PPM, operating agreement, and subscription package, to remain SEC-compliant.
- Maintain clear, consistent communication, answering questions and keeping prospects informed to build trust.
- Investment certificates are optional, and only useful in limited situations due to transfer and language restrictions.
- The goal is a smooth, compliant transition from interest to investment, supported by transparency and strong investor relationships.
Transcript
Getting the Soft Commitment
So you think that you have investors? So you think you might have some potential investors who are interested in investing in your syndication or investment fund? What are the next steps?
When you think somebody is interested in investing in your syndication or investment fund, the first step is to get some sort of soft commitment. By soft commitment, this isn’t anything formal; it’s basically so you can complete in your ledger, keeping track of your potential investors. For example, you might think this person is going to come in for $100,000, or whatever it is.
To do that, we basically ask them, “In this investment, what do you think you would be likely to invest in?” Or, “Does this sound like something you’d be interested in investing in? If so, how much are you thinking about?” Are there any questions that you have about this investment product before you come in, so that I can answer them for you?
One of my questions off the bat is, “Is this something that you’re interested in? If so, how much money are you thinking about investing? Is it going to be the minimum amount or more?”
Once we have that soft commitment, it’s not binding, but it’s an indication, so you can start keeping track of your potential investors.
Delivering the Required Legal Documentation
Next, you’ll want to provide them with necessary documentation, ensuring everything complies with SEC regulations. This might include offering memorandums and other legal documents that need to be reviewed by your potential investors.
Staying in Communication to Build Trust
Afterwards, maintaining clear and consistent communication is crucial. Regular updates and transparency build trust, making investors feel confident about their investment.
Optional Step: Investment Certificates
In some cases, you might consider issuing investment certificates. Though this is less common due to specific language requirements and restrictions on resale, it remains an option for those interested in a more formal acknowledgment of their investment.
Goal: A Smooth, Compliant Path From Interest to Investment
Ultimately, the goal is to transition from potential interest to actual investment smoothly, ensuring all legal and regulatory requirements are met. By maintaining strong communication and addressing any issues promptly, you can build lasting relationships with investors, paving the way for future opportunities.