Key Takeaways
- Start with a soft commitment, asking prospects how much they expect to invest so you can track interest and manage your internal raise dashboard.
- Provide compliant offering documents early, ensuring investors receive the PPM, operating agreement, and subscription documents before committing funds.
- Maintain consistent, transparent communication, answering questions, providing updates, and building trust throughout the decision-making process.
- Use investment certificates only when appropriate, recognizing their limitations and regulatory considerations.
- Your goal is a smooth transition from interest to investment, built on clarity, compliance, and consistent follow-up.
Transcript
Confirming Interest Through Soft Commitments
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.
Providing Legal Documents and Ensuring SEC Compliance
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.
Clear, Consistent Communication Builds Trust
Afterwards, maintaining clear and consistent communication is crucial. Regular updates and transparency build trust, making investors feel confident about their investment.
Optional Step: Issuing 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.
Final Steps: From Interest to Actual 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.