Today is an historic day for our new CrowdFunding company. We signed the broker/dealer agreement that we have been architecting and negotiating for many months – so now, the work of launching the website and our initial deals moves into full swing. It might not sound like a big deal to sign an agreement, because some would say “just hire any broker/dealer firm” but we have taken a hard look at the way other platforms are working with broker/dealers and we believe most arrangements are inadequate – at least for our needs based on our vision.
Details on our company and our partner companies will be made available shortly when the first release of our website is made public in the next few weeks. Look for the announcement.
Just like many “would be” syndicators look at the legal documents like they are just paperwork which is a necessary evil, we see the partnership with the broker/dealer to be critical to our success. We look at the legal paperwork as the roadmap that directs the relationship between the syndicator and investor for years into the future – and therefore critically important – not just from a legal point of view. Similarly, we see the relationship with the broker/dealer as central to success in the new world of securities based CrowdFunding.
We see a tremendous convergence of the private securities world with the public securities environment and the right combination of firms is mandatory to make it work correctly while providing the necessary protections for the investors, deal sponsors and platform operators. By architecting the way we conduct and process offerings very carefully, we expect to avoid the many problems we see on the horizon for so many of the other platform companies.
Our architecture mandates that we engage two separate broker dealer firms to oversee our CrowdFunding platform: one to oversee the relationship with our investors, and the other to oversee the activities of our issuers (or usually called deal sponsors). This avoids conflicts of interest and it leverages the strengths that each firm brings to the table.
We anticipate the first deals will be put on the platform by mid-summer, with the robust activity in our marketplace beginning by the end of the fall.
I’d like to thank the Board of Directors of our company for their extraordinary guidance, and to the many shareholders and friends of the company who have contributed in such positive and giving ways.
Our company is comprised entirely of deal sponsors (developers, operators and syndicators). We currently have 53 partners who have combined forces to build the most robust real estate investment marketplace available anywhere. Many of our partners have joined us at trade shows and industry events. They have learned the ins & outs of the CrowdFunding business and they have helped the company to grow and get organized so we can launch a platform like none ever before.
We know with certainty the vast majority of money is held by accredited investors and is managed in some form by a wealth manager, whether it be a Registered Investment Advisor (RIA), stock broker, or other advisor, and we intend to include those money managers in the chain of activity with our company. Although we believe that the CrowdFunding rules create democratization for access to capital, we also believe that doesn’t mean cutting out the people who advise investors and who have built extraordinary relationships with their clients. We instead want to work with these advisors and provide them with exposure to high quality deal flow in private securities involving real estate or other assets.
We believe that wealth managers will adopt the concept of private securities offered through CrowdFunding platforms, but we also believe the next generation of crowdfunded private securities will coalesce around professional sponsors because licensed advisors can’t take a chance on deal promoters who are less than full-time experts in their field.
It’s for this reason that our company has built its entire network of deal sponsors around professional providers. In our environment, only partners can use the platform and only professional deal sponsors can be partners. That means that we all have a vested interest in the success of each other’s deal and our company overall, which can only be good for investors.
We look forward to sharing more with you in the weeks to come and if you want to become a deal sponsor and feel that you meet the criteria we’re looking for, please reach out to me personally so we can talk about your participation.
For experienced real estate providers who have not yet created a syndication or fund structure (which is necessary in the CrowdFunding world), you should attend our Syndication and Hedge Fund Symposium which will take place in October 2016 so you can join the movement. To learn more, go to: http://www.dealmakingsymposium.com
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