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

think you might have some
potential investors who are

interested in investing in your
syndication, or investment fund?

What are the next steps?

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

interested in investing in your
syndication or investment fund?

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

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

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

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

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

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

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

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

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

thinking about? Are there any
questions that you have about

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

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

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

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

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

Those are like three examples of
getting a soft commitment that

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

first, certainly provide them
that private placement

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

risks, the conflicts of
interest, the terms, what

they're basically getting for
their investment dollars.

Another document is the
operating agreement, the

operating agreement describes
the company or funds structure

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

fulfill what you're talking
about in your marketing

materials and in the private
placement memorandum. The third

document is the subscription
agreement. The subscription

agreement is what the investor
will sign that basically says,

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

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

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

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

operating agreement, it binds
the investor to the operating

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

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

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

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

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

that people coming in under a
rule 506 B are knowledgeable

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

to invest in something like your
investment fund. After your

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

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

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

a very important that you've
read through the operating

agreement and the PPM and the
subscription agreement, so that

you can answer any questions
that are there things that are

likely to come up as discussing
about the risks of the

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

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

investment is worth going into,
they may have questions about

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

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

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

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

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

you know, timing is defined in
the private placement memorandum

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

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

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

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

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

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

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

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

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

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

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

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

subscription. So sometimes
you'll see that in the

subscription agreement itself,
we're referring to closing note

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

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

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

the first is signing the
subscription agreement, the

investor signs it saying and
exchange for this amount of

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

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

agreement, then I have them
complete the questionnaire that

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

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

information to make sure they
know what they're getting

themselves into, and that they
have the level of sophistication

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

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

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

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

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

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

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

typically gets deposited into
your LLC, your investment LLC

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

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

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

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

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

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

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

caught into a situation where
something bad can happen.

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

there is bad things that can
happen with fake checks and

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

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

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

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

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

like stock certificates or
membership certificates and

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

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

their specific language that
needs to appear on them, if

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

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

things like that on the
investment certificate if you

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

probably maybe 2% of my clients
actually issue something like

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

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

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

sure you've got that
communication. You execute your

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

with those problems and still
stay in constant communication

with your investors. So
ultimately, they are confident

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

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

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

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

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

there.