Blind Pool Versus Single-Project Syndications

We have been actively raising money into a blind pool for several years now and it is becoming increasingly clear that it is much easier to locate investors and sell them on a specific investment instead. In general the hierarchy seems to be (from most difficult to least for equity):

1. Active JV partners

2. Specific syndications

3. Blind pools

The market for folks capable of investing under traditional securities regulations is pretty thin. Accredited investors, as a general rule, are generally capable of making their money work hard for them on their own. Thus you either need projects superior enough to theirs where they feel comfortable relinquishing control or you need to target the subset of investors that are both accredited and are too busy to make their money work hard. Small family offices, doctors, and folks of this type fit well, but the demand for these funds far exceeds the supply from what I have seen.

New platforms like Fundrise and others like it should mature over the next year. With many of the new securities laws I hope to see that the barriers to entry for investors and promoters drop significantly. Bypassing traditional gatekeepers on Wall Street should serve to reduce capital formation costs and the overall cost of equity capital; making many projects more viable for entrepreneurs and creating more jobs.