Whale Investors Can Krill Your Offering…
Waiting for large investors (I call them “Whale Investors”) to fund your offering is a certain way to doom it to failure. Whale Investors are known for 3 things:
Stringing syndicators along and then bailing when it comes time to cough up the funds, leaving you with an underfunded deal. This could cause you to lose the deal if you can’t replace their funds before your escrow runs out.
Renegotiating terms at the 11th hour so you don’t make enough money to make the deal worth your risk.
Treating you like you work for them or trying to take control of the deal – didn’t you become a syndicator so you could fire your boss? Additionally, it’s not fair for your smaller investors to have one large investor who thinks they have the right to call all the shots.
My advice to clients with potential Whale Investors is this:
“Don’t stop raising money until you have their funds in the bank. If you keep raising money $50k to $100k at a time, you may not need their funds (or so much of them) by the time you get closer to closing. This will take away their ability to renegotiate terms or take control of your offering.”
The only sure-fire way to make sure you control the raise and don’t get left high and dry at the closing table is to have a ready source of investors waiting to invest in your deals.
Some of the ways you can get this is by networking and following up with potential investors; holding educational events and following up with attendees; and letting everyone you know about your new syndication business and following up with them to keep them informed of your progress. As you can see, follow-up is key to cultivating and maintaining relationships with potential investors so they are ready to invest when you get a deal.
How do you follow-up with your prospective investors? If you don’t have a plan (most people don’t), here are 3 things you can do right now to get started:
Check out our Online Store where you can purchase the Investor Marketing Program Template for $250; or
Better yet, become an Annual Retainer Client for $1,000 and get it for free, plus get access to our Clients-Only Facebook Page, live Clients-Only Training on developing investor relationships and up to 3 hours of legal consultation, or
Click here to schedule an appointment to see how we can help you meet your syndication goals.
What’s in a Securities Offering?
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