How to Raise Capital Using 5 Simple Steps
by Christopher Levarek
“It is literally true that you can succeed best and quickest by helping others to Succeed.”
- Napoleon Hill
You might find me on the platform BiggerPockets, an online real estate forum, when I’m not writing a blog article. In truth, I greatly enjoy this platform for connecting and networking with others on real estate investing strategy and business development as we work together to build our visions of the future. However, on this forum and in general, one for the most common hinderances or blocks for people when investing in real estate appears to be the subject of capital or money.
Like many things in life, the shortage or lack of something is used by many to hold back their dreams or actions. I know what you are thinking, “Oh boy, here comes the mindset speech…” No worries!
This post won’t be about any kind of inspirational speech on positive thinking. Today, however, I will share 5 proven steps you can use for raising private capital to partner and achieve your goals whatever they may be.
Whether you are looking to reinvest raised capital into other deals, partner with capital on projects or build a syndication investment business, these proven steps are used by many in the field and will clearly define just “how to raise capital” for real estate or any investment.
Step 1 - Know Your Audience
This step is missed by many in all areas of the business yet could be the single most important step of all. You need to define your audience or your avatar. Who is your ideal investor or partner that you are looking to invest with or raise capital?
Really get detailed here and answer the following :
What do they look like?
How old are they?
What hobbies do they like?
Are they married? With kids? Single?
What jobs do they have?
What platforms or media outlets do they use? Tiktok? Facebook? Newspaper?
Painting the picture of who you want to speak with is the most crucial first step. The quote from Alice in Wonderland “If you don’t know where you’re going, any road’ll take you there” comes to mind. You must clearly see your ideal audience.
Step 2 Build Your Brand
Now that you know your audience, it’s time to build your image or brand. Hopefully your audience shares similarities with your life or situation as this can make this step much easier. Really however, this step is simply about creating your image in a manner that lends credibility to your efforts. So begin to note all personal qualities, hobbies, experiences and commonalties that would inspire confidence from your audience in who you are.
Answer questions such as :
What past investments passive or active have I done?
What past projects have I been on?
What past work experiences have I been successful on?
How many people can vouch to my character? Where are they?
What are my Strengths? Weaknesses?
What is my strongest purpose in life?
What is my strongest core belief?
Truly developing your brand means marketing yourself. Understanding yourself means marketing yourself well. Raising capital requires credibility and this requires building your brand.
Step 3 Build Your Platform
This step, quite often, goes hand in hand with the previous one. In order to truly build your brand, you need a platform. The platform or medium is your method to tell people about your brand, ie. you or your company or message.
In today’s online world, building a platform can be creating a LinkedIn profile, building a Website, starting a Facebook Page, creating a Podcast, starting a Meetup or even writing a blog on Medium.com for example. The platform is simply the tool that will enable people to find you, learn about you and ultimately begin to build a relationship with you. In order to choose your platform, I recommend to answer the following questions :
Do I like speaking to people?
Do I enjoy online or physical interactions?
Do I like writing?
What are my skills with a website? Do I want to learn?
Do I have an existing social media profile I can use?
What social media platforms do I enjoy?
Simply by answering the above you will get a good understanding of which type of platform you would enjoy or be good with. My personal recommendation is to limit to 1-2 platforms initially. At the least however, always create a LinkedIn profile as this is by far the easiest way to ensure you are found in Google when someone types your name in the search bar.
LinkedIn profiles are typically the very first result in search requests by personal name. Try typing your name or even my name “Christopher Levarek” and see the result in Google.
Think on this. If you aren’t found, how can you be credible?
Step 4 Build Your Funnel
With your audience defined, your brand established visible on your platform, it is now time to build your funnel. Step 4 is really about the path that your audience takes to end up where you would like them to, investing capital with you. So think about the journey a listener, reader or meetup attendee would take to get to the final destination. This is what is called building a funnel and how to raise capital effectively.
The funnel might look like this :
Potential investor/customer/partner finds your platform (podcast, blog, social media profile, website)
You communicate your Brand or Message on the platform
Investor clicks button to join your investor list by entering an email.
Investor invests on a deal you send to your investor list.
The above, of course, is a very simple funnel. You are taking an investor or partner on a four step journey. There might be and usually are, a few more touchs before someone completely unfamiliar with your message or business would invest with you.
However, the principle is always the same. Have a clear funnel to guide someone to where you would like them to be. Make it simple and make it a single funnel to start. Try not to overcomplicate the decisions needing to be made by the person visiting your platform. One single button, one single choice, one single journey to set destination.
Step 5 Develop The Relationship
Step 4 and 5 could be swapped or even made into one step. Yet, developing the relationship is essential when learning how to raise capital. This process begins when the investor/partner visits your platform and continues throughout the funnel. In order for anyone to invest with you, it is imperative that this person know, like and trust you. So how do you get to that point? The answer is developing the relationship.
To work on developing the relationship, try incorporating the following into your platform and funnel :
Demonstrate alignment of values and purpose on your platform with your audience.
Have multiple touches or communication efforts with an investor PRIOR to your ask or investment opportunity offer
Listen and connect on similar experiences, hobbies or family.
Be Authentic, speak truthfully. (Visit Step 2 for more on this)
Be Patient, building true relationships take time.
Time and again, experienced capital raisers tell new capital raisers to “start with friends and family”. The reasoning behind this should now be apparent after reading Step 5 and that is anyone raising capital already has a relationship with their friends and family. Their work is much easier!
Clearly Step 5 is very important for success. Developing the relationship is very important to avoiding “having to sell” someone on an idea. If it feels forced, you have most likely not developed the relationship or are not talking to the right avatar/audience.
In Final
There you have it! Those five steps are how to raise capital for real estate, investment or any cause. When executed and put into practice, raising private capital becomes more of a fun partnership where all parties come together to achieve their goals. An investor is not a sale or prize to be won, but rather a partner in a joint venture. Both sides have something to be offered and both sides benefit.
Using the above five steps will not only feel more authentic and enjoyable, but you might even make a few friends and future long time acquaintances. I also recommend joining our Investor Club to see how work with real estate investors in our opportunities and perhaps even invest passively into a few.
Happy Investing!