This is a very good article to keep in mind for those of you planning on raising capital on your own for your projects. We do something similar for every investment we put together for our investors. It can be very effective. I definitely recommend keeping it concise, asking for everything you need up front, having a plan with multiple exits, etc.
This article is from Joanna Shwartz of www.entrepreneur.com/
5 Lessons From Commercial-Real-Estate Financing for Entrepreneurs Seeking Funding
Whether tapping traditional funding sources or conducting online crowdfunding rounds, founders face a huge challenge when raising capital. Even highly active growth investors are hard to reach and harder to close.
Since startup investors are typically inundated with investment options to choose from, they can afford to be picky, fickle or both. That’s why it’s critical for entrepreneurs to showcase their capital raises in a manner designed to convert potential investors into actual shareholders. Modeling a growth-capital raise in the mold of commercial real-estate financing is one way to do that.
Raising capital in the commercial real estate (CRE) world is a different game than early-stage fundraising. Whereas an entrepreneur can pursue his or her company’s funding needs in tiered phases (seed, series A, bridge rounds) over the course of the business lifecycle, a real-estate developer typically needs to secure all of the debt and/or equity capital for a project up front, in full, before ever breaking ground.
CRE developers and sponsors often have to raise large sums very quickly from multiple sources at a time. To do that efficiently, they typically bundle up all of the information on a given capital raise into an all-in-one-package for investors.
Yet the effectiveness of the commercial real-estate-financing model lies beyond the convenience of a pre-packaged investment. Rather, it lies in the nature in which the inherent value of the investment opportunity is communicated to investors within that package.
Each of the following characteristics is common in, but not exclusive to, commercial real-estate financing, and how and why entrepreneurs should incorporate these qualities into their own fundraising strategies.