Episode 45 – How Long Does It Take to Raise Money for a Reg D Syndication?

A huge question weighing on most new syndicators’ minds is: How long does it take to raise money for a syndication?

My name is Tilden Moschetti. I’m a syndication attorney with the Moschetti Syndication Law Group. Quite often I get the question from new syndicators or new fund managers, “Just how long do you think this is going to take? For me to raise this 2 million? 4 million? 10 million? 20 million?” It’s a frank question, and it is probably the most difficult question I have to answer because it falls down to that “it depends” answer.

I’ve seen syndicators raise money in incredibly short periods of time, 24 hours, very small amounts of time, lots of money. I have one investor, one syndicator, who I work with who raised $500 million in four hours. That is definitely not the norm. So don’t take that as “Well, of course, you can do that here.” Because it’s definitely not that; it is extremely unusual.

A lot of times, it takes a lot longer. My first deal that I raised money for, I raised $3 million, and it took me six months. Now I didn’t know what I was doing then. This was before I was practicing as a real estate syndication attorney. It was before I had ever done my first deal. It was about 10 years ago. And I didn’t really know too much about Regulation D. I had a great deal come to me, put the deal together, learned a lot along the way, and then really started raising money. That’s how I built my engine of knowledge about how to raise money, aside from how to put together these syndication projects and equity funds.

But it was a huge ongoing process. I didn’t have any guidance, I didn’t have anyone to do it. So it was a lot of trial and error. That takes a lot longer. We were successful in raising money in that six-month period, raised $3 million for it. Six months is a really long time; I was very lucky that that particular asset was able to wait six months in order for me to make that raise.

Now, it takes a lot shorter than that. Not only because I’ve built up investors that I’ve had before, but I also know the process. And I also know the amount of work it takes. And that’s why this question is so hard to nail down. Because it really depends on two things.

It depends on, number one, how big your network is. If you’ve got a really big network of very wealthy people, it’s not going to take you very long to raise money. They’re going to want to invest with you because they already know you, they believe in you, and they’ve got lots of money that’s sitting idly by. If you don’t have an extensive network, and you’re going to rely on advertising, or you’re going to rely on meeting friends of friends, and then building that relationship and converting them into a 506b offering, it takes a good amount of time, because you have to still nurture that relationship.

The second thing that really is the determinant is how hard you work. Raising money isn’t simple. It is absolutely not like you see here on YouTube, many times other people saying all you have to do is put it online and watch the cash flow in, because it’s definitely not the case. And any one of them that thinks it is, any one of the gurus that’s saying it is, I challenge them to show me a case where all they did was put it up, unless they’ve got some enormous brand name. And even then, some of the cases are they have a lot of challenges.

So if you don’t have a big name, and you’re expecting to just put it up online, it’s not going to just happen very quickly. It does take a huge amount of work. And that work is very enjoyable. I won’t tell you otherwise. You’re getting to talk with people, you’re getting to meet people, talk about strategy and talk about your project, which you probably find enjoyable anyway, otherwise, you probably shouldn’t be doing a syndication. But it is work.

And so when you put those two together – your existing network and the amount of work that you put in – those are the two variables that are going to dictate just how long it takes.

Now, if you were going to be raising a million dollars, I would say it’s probably going to take on average – and this is very average, and you as a new syndicator are not average, you’re either above average or below average. So it’s either going to take longer or shorter, I don’t know. But I would say in general, if you’re going to raise $1 million, it’s probably going to take about a month and a half. If you were going to raise $3 million, and you’ve worked really hard at it, and you had a really average network, but a good enough network, it’s probably going to take two to two and a half months. But it’s a lot of work. And you really need to work it. And also what you’re syndicating needs to be unique, and you need to have a good story.

So you’ve got all these things that are kind of dictated, which is why I actually didn’t want to record this video in the first place. Because I’m scared of being able to answer that question. Because it just depends. So sorry, I can’t give you a much more concrete answer. But the truth is, it is just variable.

I’m not going to be like one of the gurus who says that, yes, you can absolutely do it just by putting it online. You’ve heard clearly that that’s not my position at all. But it does take a good amount of work, but you can do it. And it absolutely can be done. And I think anybody can if they apply the right work, and they do a good job, and they’ve got something that they’re syndicating that they really believe in. And that has a good story and has a reason for why to do it. I do believe that with the right amount of work, they absolutely can find the money and get that money raised.

I hope that helps – that great non-answer video answer. But if you’d like to talk about your specific project and I can help you as a syndication attorney, I’d be happy to have that conversation. Give my office a call.