Minimums for Syndication?

[Christopher Giannino]

I'm curious to hear from the people who syndicate what their minimum required investments are from investors?  I understand that every deal is probably different so there's not a 1 size fits all kind of answer but is there some sort of minimum you personally require for it to be worthwhile to you?  I assume that you're not going to take $5,000 from someone here and $10,000 from someone there if you're attempting to raise a couple of million dollars because it just doesn't make sense.  

[Brian Burke]

Almost 20 years ago I started my first fund.  I raised $500K from my friends and co-workers to buy foreclosed houses.  I took as little as $5,000.  I guess that's what you do when you don't have a lot of options!

My next few deals I took as little as $25,000.  By around year 5 I had increased my minimum to $50,000.  And a couple of years after that I went to $100K and have held there since.  I think I've raised somewhere in the ballpark of $80 million now and with a broad base of hundreds of investors (and growing) our minimum will likely stay where it is.

That said, we have discretion to accept investments below the minimum amount and we do so on a case-by-case basis--most often with a new investor making a first-time investment with us.  Oftentimes people want to dip their toe in the water before they dive in and having flexibility on the minimums allows them to do that.

Minimums aside, most repeat investors are placing $200K to $400K per deal, and some put in seven figures.  And there are those that just put $100K into every deal just like clockwork. 

Once you get going you'll see quite a variation in investment size and frequency, but at the beginning you do what you have to do to build a track record and the trust of your investors.  Even if that means taking smaller placements than you'd like.