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Tilden Moschetti, Esq is a private placement memorandum attorney and a syndication lawyer. He has helped syndicators put together Regulation D offerings for their real estate syndications, business capital raises, and funding private equity firms.
As a syndicator, or a fund
manager, it is always your job
to be looking for investors.
Even if you already have deals
going in, or you don't have any
deals that you're looking for
investors right now, shopping
for them is the most important
thing that you can be doing
every day. When it comes to
them. When it comes to
investors, one of the best
sources is a family office,
family offices have a lot of
money to invest, but they're
also very, very smart. So let's
go through 10 tips on getting a
family office to be invested in
your offer.
Family Offices can be a great
investor base for you. They are
led by very smart people who
know the business very well,
which is a challenge to sell to
them, because you certainly
can't hoodwink them, but they
also are very, they have a lot
of money. And if they've decided
that you're a good pig, most of
the time they invest with little
additional oversight, they just
want to make sure that their
money is well placed, and that
they can trust you to do a good
job. But once they've made that
decision, then they just review
the documents or the notices or
the updates that you send them
and are very, very easy after
that. Also, they can be a great
resource to find other family
offices. And they can also be a
great resource if you just are
hit a roadblock or a little
problem that you need additional
help on. As I said, these are
led by very, very smart people.
And so the additional help is
oftentimes a phone call away if
you really need it. So let's go
through the 10 tips that I would
recommend in working with family
office. Now first and foremost
is trustworthiness and
integrity. If they don't trust
you, you're out the door. And
everyone they've talked to is
going to hear about how
dishonest you are. The most
important thing is that you are
just transparent, open book, if
you're taking a big feat,
disclose the fee, there's no
reason to hide it or to try and
stuff it if your performance
wasn't what you thought it was
going to be in the last
investment. Still tell them why
what happened, explain why it
went on what you learn from it,
you know why that why that
situation took place, and what
sort of things you're doing to
mitigate that chance in the
future. Just be open and
transparent. And that'll go a
very long way to building that
trust and getting them to invest
with you. Number two, also
critically important is having a
long term vision. For me, this
fits in with the founder
investment theory. Because if
you don't have that, what are
you going to talk to them about?
These people see deal after deal
after deal, when they choose to
make an investment, they're
choosing to make an investment
in you. It's not that they're
going to be interested in that
plain vanilla box, multifamily
building down the street. It's
not very interesting. They want
to know the story of it. Why
should you do it, now don't
waste their time with a very
long story. But it needs to
actually be coherent, show a
vision of why you are the pick
for them. It's not always about
long, long, you know, massive
amounts of gains for them. It is
about strategic long term
vision, where they can basically
count on you time and time
again, to invest with they're
entering into a long term
relationship in their minds most
of the time. And they want to be
able to not have to second
guessed that every single time.
And that comes from vision,
which means your founders
investment theory needs to be
tight. Number three, and this
also goes to that is the
alignment of values. So if you
are going to be doing a chain of
vape stores, which is totally
fine and doable to do, you may
have investors who are just not
interested in vape stores
whatsoever. They are opposed to
it, their great grandfather died
of lung cancer, something like
that. Whatever it is, it's got
to align properly with who they
are and what they represent.
Most family offices have a very
clear picture of what their
ideal investments look like or
feel like to them, and it needs
to match up to that. And if it's
not a match, that's fine. It's
just not a match and they're not
going to change their values in
order to invest with you. But
make your values clear so that
they can understand very quickly
without having to read between
the lines what you stand for.
Number four, direct
communication. They need to be
able to pick up the phone and
talk You immediately, they need
to be able to have candid
conversations quickly, they
don't want to waste their time
on going through loopholes in
order to get you on the phone,
or to be able to understand XYZ.
Number five, there has to be a
clear exit policy, not a not
sorry, clear exit strategy. You
can't just say, well, we're
going to hold it for a while,
and then we're going to leave,
they are long term planners,
they need planning is the key
word there, they need to
understand their portfolio and
how their portfolios going to
evolve over time, they need to
know well, if this sort of event
happens, these are the
consequences to what's going to
happen for the benefit of the
family or families that are
they're part of that family
office. Number six is
diversification. The reason that
they're talking to you at all is
because they need to diversify
their funds. So they cannot put
all of them in all of their
funds with one money manager, or
one syndicate or one private
equity fund, that would be
disaster for them. One of them
goes out, they've lost
everything. Diversification is
the key for them, they make a
very large portfolio plans, and
they need to understand how you
fit into there. So help them out
and make it clear how you're
divert how your project how your
fund how whatever you're
offering is, can fit into a
diversity of their of their
portfolio as a whole. Number
seven, educate you just don't
pitch, right? Don't pitch these
people, you don't hard sell
them, they need to understand
what you're doing. And that's
it. These people see deal after
deal after deal. It doesn't
matter if you can sell snow to
an Eskimo because they are going
to make the decision purely
based on what we've just talked
about. All these things are what
are going to be part of their
decision making process, not
some fancy sales tricks. They've
seen it before. And they will
not tolerate any sort of
shenanigans going on with that.
Number eight, showcase your
track record, no matter what you
have a track record. So even if
it's a track record, that's very
short, showcase why you're good.
Showcase why you're doing this,
make sure make it clear on why
you can deliver results. Number
nine, personalize it. At the end
of the day, you've got another
person across the table from
you, they need to understand who
you are that builds the trust,
that transparency, that
integrity, that vision, they
need to be able to see all that
personalize that and it will pay
dividends. Number 10. Always
look for co-investment
opportunities with them. So they
don't want to be the only one
investing in your project. They
would love to see you co
investing in it as well. skin in
the game is important for family
offices, they want to make sure
that you've got a lot to lose if
this thing goes south, because
they feel like they should do
when they have to talk to the
heads of families that are
investing with them. So make
sure that you have those
opportunities. If it's not
there, that's okay, still have
those conversations, but set
your expectations of a little
bit lower. Because maybe they
have very high requirements.
It's possible that they don't
they may just like you enough
that they'll do it anyway. But
make sure that they that if you
do have that, hey, we're going
to be putting 20% of our own
money into it. Oh, that's a big
deal. That suddenly tells the
family office Okay, these people
are just as invested as they're
asking us to be. I hope these 10
tips have helped. Please let me
know if we can help you put
together your next Regulation D
rule 506b or 506c syndication,
fund or syndication then we will
we will help you