Todd Heitner:
So for somebody maybe working on their first deal, do you have any strategies that would work for them for raising money for their first deal since they don’t have that experience and track record?
Adam Adams:
Yeah, definitely. So if you have a track record, you’re going to actually use a past deal as your sample deal. But if you don’t have a track record, you need to have just a sample deal. That’s a pretend deal and a type of deal that you’re going to look for. So it’s very essential that you have the… Have a sample deal.
Another thing that I would say is really important is that you want to get educated, [or] somebody on your team. You’ve got to get educated. You’ve got to kind of know what you’re doing, listen to some podcasts and hopefully pay some type of education.
I’m not saying you have to pay 100 grand or even 50 grand, but you got to probably really do what you can to be the type of person that’s going to be able to protect this money. You don’t want to be completely lost.
Which comes to my next thing that you should do if you’re brand new, is I don’t like seeing what’s called the ‘blind leading the blind’, somebody who’s never, ever, ever syndicated, partnering with somebody else who’s never, ever, ever syndicated.
Neither of them really know what they’re doing, but they’re kind of like friends or they might feel like they’re the yin to the yang and they might feel like they both are motivated. But when you have the blind leading the blind, you’re really putting your passive investors money at risk.
So the suggestion that I would have for the new person is to actually on your first 1 or 2 deals, at least the first deal for sure. But usually I like to recommend two deals in a row that you end up co-GPing with a team that’s already in place, somebody who’s been asset managing for a long time, because that’s the hardest part. It’s not all about finding a deal and raising money. The hard part is the asset management. That’s the tricky part. And that’s where most of the money is lost or made.
And if you’re brand new and your teammate’s brand new, it’s going to be difficult. So instead of having the blind leading the blind, actually partner with somebody who’s been there and done that before.
The only other thing that I would suggest is try to get the money before you get the deal, as many people that will tell you, “don’t worry, the money just automatically comes”.
I hate those people. I’m against those people. I want to punch them in the face. Right? Like that’s not appropriate to be telling somebody who’s new that the money just automatically follows.
If nobody knows who you are, nobody’s going to invest in your deal. You’ve got to start raising the money in the beginning so that you’re prepared. Don’t go “ready, fire, aim”, like they say. Go “ready, aim, fire”. Be prepared before you try to close. So that’d be the the advice I would give to somebody new.