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Tilden Moschetti: So you think
that you have investors? So you

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think you might have some
potential investors who are

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interested in investing in your
syndication, or investment fund?

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What are the next steps?

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So what are those next steps?
When you think somebody is

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interested in investing in your
syndication or investment fund?

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Well, first, it's probably to
get some sort of soft

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commitment. So and by soft
commitment, this isn't anything

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formal, it's basically, so you
can complete in your ledger,

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that you're keeping track of
your, your potential investors,

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hey, I think that this person is
going to come in for $100,000,

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or whatever it is. So to do
that, we basically ask them, so

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in this investment, what do you
think you would be likely to

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invest in? Or does this sound
like something that you'd be

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interested in investing in? And
if so, how much? Are you

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thinking about? Are there any
questions that you have about

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this investment product before
you come in? So that I can

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answer them for you? One of my
questions off the bat is going

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to be you know, is this
something that you're interested

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in? And if so, you know, how
much money are you thinking

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about doing it, it's gonna be
the minimum amount or more.

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Those are like three examples of
getting a soft commitment that

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can be done by email or things
like that. A lot of times, if

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it's written down in an email,
it's a little bit easier to

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convert to the next step to the
hard commitment stage. But a lot

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of times, you'll just do it in
and just kind of an informal way

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like this. When you've got those
soft commitments, the next thing

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that you need to do is you want
to provide them the key

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information. Now that not only
is not only as unnecessary, but

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it builds that level of trust.
So the first thing that you

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always make sure that you do,
and it's not provide them a

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document yet, the first thing
that you do is make sure that

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they know that they have access
to you for follow up questions.

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That's what you're there for
you're a salesperson, you need

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to make sure that any questions
that they have get answered in a

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timely manner, they need to know
that. So that's the first thing

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that you provide them. Now we go
on to the legal documents. So

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first, certainly provide them
that private placement

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memorandum. This is the document
that describes in detail, the

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risks, the conflicts of
interest, the terms, what

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they're basically getting for
their investment dollars.

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Another document is the
operating agreement, the

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operating agreement describes
the company or funds structure

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itself, in terms of how it's
going to work in order to

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fulfill what you're talking
about in your marketing

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materials and in the private
placement memorandum. The third

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document is the subscription
agreement. The subscription

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agreement is what the investor
will sign that basically says,

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in exchange for this money that
I'm about to give you, I am

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going to get those members of
units. Here's what I promised,

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I've read the PPM, et cetera,
the syndicators saying, Yes, I

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understand that, here's what I
promise I'm going to live by the

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operating agreement, it binds
the investor to the operating

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agreement to the investment fund
itself. The last thing that I do

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that I think is very helpful as
an investor questionnaire, this

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can take care of a lot of
different things. Certainly, it

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makes it easier at tax time by
putting all the information in

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one place. But also, it also can
set that basis for making sure

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that people coming in under a
rule 506 B are knowledgeable

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about investing. So that it's
not a it's not unusual for them

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to invest in something like your
investment fund. After your

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investors have the all the
documents that they need. It's

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now time that you do that you
and address any questions that

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they have. Now, they may have a
bunch of questions. So it's also

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a very important that you've
read through the operating

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agreement and the PPM and the
subscription agreement, so that

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you can answer any questions
that are there things that are

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likely to come up as discussing
about the risks of the

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investment, talking about what
the terms are, what kind of

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return are they likely to get,
and why they think that your

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investment is worth going into,
they may have questions about

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your management team, how it's
actually going to function so

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that they can build that level
of trust even higher so that

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they're willing to give you that
$100,000 that they already gave

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you a soft commitment for they
may be interested in the exit

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strategy, what sort of timing
are you thinking about going the

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you know, timing is defined in
the private placement memorandum

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most of the time, but they want
some assurance on what that

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timing is. It can it can be
deviated from but they need to

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know what to expect. And also
fees and expenses is the normal

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thing as well. They need to know
you know, what sort of fees are

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you charging off the top if
you're charging 20% asset

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management fee? Holy moly,
that's a big number. Normally,

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it's something and closer to do.
So they need to know what that

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is and why why you've allocated
expenses and fees that way. And

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they may have questions on it
beyond what's in the PPM. After

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you've given the investor the
documents after they've asked

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all the questions that they need
to, now it's time to finalize

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the investment. A lot of times
we call this the closing of the

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subscription. So sometimes
you'll see that in the

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subscription agreement itself,
we're referring to closing note

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for this on the side, that's not
the closing of the real estate

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property, we're talking about
closing of the contract of the

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subscription agreement. So what
are those steps look like? Well,

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the first is signing the
subscription agreement, the

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investor signs it saying and
exchange for this amount of

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dollars, I'm getting this much
units or this much interest in

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the company or the fund or the
syndication. So they sign that

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agreement, then I have them
complete the questionnaire that

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gives them not only get not only
gives you the information you

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need on the taxes, but it also
gives you that additional

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information to make sure they
know what they're getting

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themselves into, and that they
have the level of sophistication

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to get into it in the first
place. And then third, they wire

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their funds or send by Ach,
there's different mechanisms for

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it. There are pros and cons to
both and if you like once, once

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you're a client of mine, we can
go over what the different

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choices are. Last step is
confirm the last step after your

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investor has wired you the
money. What do you do then? Do

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you just deposit it or what what
happens? Well, that money

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typically gets deposited into
your LLC, your investment LLC

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bank account, typically we don't
use escrow accounts, typically,

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it's going into that bank
account. So you as the

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syndicator, the investment fund
manager, the sponsor, you are

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going to look in that account
and verify it's there. So you

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want to make sure it's there,
you want to make sure that

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there's no nothing funny about
it. And that the money is is

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basically safe, because you
don't want to get yourself

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caught into a situation where
something bad can happen.

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Second, and wait till those
funds have cleared. By the way,

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there is bad things that can
happen with fake checks and

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things like that. So just make
sure that the money has cleared

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and is truly in the bank account
first. So you're going to

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confirm that those funds are
there, you're going to confirm

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you're going to counter sign the
subscription agreement and send

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it back to the investor. You can
also issue what we think of it's

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like stock certificates or
membership certificates and

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things like that. It's not very
common, but I have had clients

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do it. There's reasons why it's
not very common, mostly because

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their specific language that
needs to appear on them, if

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you're going to do it, and it
kind of takes away though, the

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fun of it, because we have to
say it's not for resale and

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things like that on the
investment certificate if you

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decide to issue them. Very, very
rarely does do people do that

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probably maybe 2% of my clients
actually issue something like

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that. So that is what happens.
Those are the steps in order to

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get the money from or go from an
investor is interested into,

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they've already invested in now
all is good. From very just make

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sure you've got that
communication. You execute your

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plan the way it is. If there are
problems that come up, you deal

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with those problems and still
stay in constant communication

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with your investors. So
ultimately, they are confident

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in you and they will trust you
in your very next deal. My name

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is Tilden Moschetti. I'm a
syndication attorney for the

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Moschetti syndication Law Group.
If we can help you with your

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Regulation D rule 506 B or 506 C
offering, be happy to help give

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us a call set up a time to meet
with us and we can go from

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there.