[WEBINAR] The Three Secrets to Raising Capital from High Net Worth Individuals

The three secrets to raising capital from high net worth individuals are…

  1. Connect emotionally
  2. Always be educating
  3. Focus on execution

<<DOWNLOAD SLIDES>>

SECRET #1 RESOURCES: Connect Emotionally

The story I referred to during the webinar where Matt details the various trials and tribulations begins at 3:32. He will typically share some version of this story at every investor event we host.

Stephen Seal’s personal story starts at 0:39 in the video. In a very short period of time Stephen gives you a glimpse into what he’s all about.

Blake Hansen begins his presentation with a video that is narrated from the perspective of a prospective investor. In two minutes, it sets the stage for what Blake is all about as a person and a real estate investor. Very powerful!

SECRET #2 RESOURCES: Always be educating

SBRE Investment Summit

In this video Matt explains the genesis of the SBRE Investment Summit and what the true purpose of the event is. This event really hits on all three of the secrets. There are emotional connections on many levels, the entire purpose of the event is to educate and the event itself is executed perfectly from the way people are invited, to how they are treated the moment they step off the plane and the venues are always world class.

37th Parallel Properties

This is one of the best, if not the best, website I found when pouring through hundreds of real estate investment sponsors website in search of the three secrets being executed.

Hughes Capital (Greg Hughes and Steve Sixbury)

Greg and Steve are masters of the educational investor event. I believe this is the playbook that every sponsor should run. It is the perfect format to execute on all three of the secrets and all things being equal should have a really great return on investment. Not everyone can pull of an SBRE Investment Summit but you can pull this off.

Mile Marker Club (Ryan Parson)

The combination of the Mile Marker Club and Ryan’s Motorhome & Money Tour are absolutely brilliant. Ryan drives a motorhome all around the country and creates a built-in excuse to throw a party. The motorhome is ostensibly a moving billboard as it has a graphics wrap with a call to action for high net worth investors to reach out if they want to learn more about how to maximize their retirement funds. Genius!

Self Storage Investing (Scott Myers)

 

Pacific Private Money (Mark Hanf and Edward Brown)

Fund Manager Chronicles: Raising Capital

In the first installment of the Fund Manager Chronicles, I explored the lessons learned by the Fund Managers I spoke with since starting their Funds. This week I will focus on effective strategies for raising capital, one of the biggest challenges in managing a Fund.

Relationships are crucial

In this day and age, with our lives so intertwined with technology, I found it interesting that when asked about the most effective strategies for raising capital no one mentioned technology. Rather, the overwhelming theme was raising capital when there is a relationship based on trust.

Trust is based on more than a marketing deck – it includes knowing the person you are investing with and seeing their performance over time. Fund Managers who don’t sugarcoat or hide information build trust; honesty and transparency are key to building successful relationships with investors.

This trust needs to go both ways; the Fund Managers I spoke with discussed the need to get to know investors before accepting their money and watching out for signs that the relationship could be problematic. Such signs include investors who are argumentative about the terms of the investment but decide to invest anyway, complain about past investment managers, or drain resources with constant questions and complaints.

Grassroots approach

All four Managers started with a grassroots approach that included making their first investments with all or a combination of friends, family, and business acquaintances. The Managers were able to expand their investor base by taking care of their initial investors, who told people in their circle about the experiences they’d had with the Manager. If investors are happy with what you’re doing they will let others know. Conversely if they aren’t happy with their investment they will spread that information as well.

Through existing investor referrals, one Manager is pursuing the Registered Investment Advisor (RIA) channel. As RIA’s are bombarded by investment opportunities, it helps if there is an introduction by a mutual investor and if you have a variety of offerings.

 Conferences

Although conferences were not high on the overall list, one Manager shared how lucky he felt to be part of the Small Balance Real Estate (SBRE) community. The SBRE Summits he presented at enabled him to connect with many investors with whom he established deep relationships that continued long after these events.

Another Manager has had some success raising money from attending conferences, although it required an incredible amount of follow-up in addition to the costs just to attend. Another Manager viewed so called “investor conferences” as a poor use of time and money.

Marketing

Only one of the Managers shared that he was able to raise sizable capital from investors with whom he did not have a pre-existing relationship with from crowdfunding platforms. Another Manager raised small amounts from crowdfunding platforms, although he did not think that the amount raised was worth the associated reporting burden.

Success has also been found in internet marketing focused on producing educational material to help investors learn how the alternative investment world works so that they can make better investing decisions. Having a website that people can dig into is valuable because people don’t like to be sold, but like to be able to easily access information and look at it on their own.

Regardless of the strategy, effectively and successfully raising capital changes your life by opening your network in a way you never imagined.  It connects you with successful people who have the ability to invest significant capital with you and, in some cases, also provide valuable business advice.

Stay tuned for the next installment of the Fund Manager Chronicles, focusing on investor relations.

This installment was again based on my discussions with the following four Fund Managers who have successfully raised capital in the fund format:

Drew Buccino, CMB

Principal and COO

CALCAP

www.calcapadvisors.com

 

Matthew W. Burk

CEO

Fairway America, LLC

www.fairwayamerica.com

 

Blake Hansen

Managing Partner

Alturas Capital

www.alturas.com

 

Max Sharkansky

Managing Partner

Trion Properties

www.trion-properties.com


 

Erica England, C.P.A

Redwood’s Chief Accounting Officer Erica England C.P.A. has 10+ years of experience working in the private equity industry and is always happy to discuss how Redwood could help you with your fund administration needs. Reach out to Erica at erica.england@redwoodrea.com to learn more.

 

 

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