February 23, 2015
When you walk into Wal-Mart, it’s very comforting to see the well-known brands that dot the American landscape on their shelves. Consumers feel at ease with brands. They trust them, they know them, they like them, they ask for them by name. And for all of those reasons, stores carry brands. Although, they tend to make a little more money with off-brands or with house brands, some consumers still the big name products.
The same is true about the way people make investments. Stock market equity investments are frequently but not necessarily made by brand, although lots of people like to stay with the well-known companies or blue chips. But in the private placement business, the vast majority of investors are looking to place their money not so much into a deal – because they don’t have the ability to underwrite the deal professionally – but they believe that in the hands of capable promoters they know, trust, and can identify with, they can feel comfortable. It’s the brand that the promoter creates over time that is so critically important to the successful execution of transactions and it’s what gives the branded promoter the ability to raise money for deals.
So if this is the case, and consumers are looking for private placement opportunities that are sponsored by people that have a track record, a brand, and a name, then why are so many of the portals supporting issuers that don’t have a brand? In fact, in some cases, the name of the promoter is withheld all together.
Worse, in the age of the Internet and disintermediation, some of the larger portal companies are trying to be the brand that consumers count on to vet the operator of the deal. There seems to be some irony in an Internet company disintermediating so they can be the intermediary.
If you look at the portals that are CrowdFunding right now, you’ll find is a lot of one-off opportunities and deals that are not being structured by well-known, professional syndicators. A professional syndicator wouldn’t use a portal the way that the portals are currently set up because the most important tool that a professional syndicator has is his or her professional raising capital arsenal is each individual investor. And although the portals are implying a shortcut to the fund raising process, the truth is that most of these portals don’t ever give the promoter any insight or information about the investors that are going into the deal. The problem with that is that the promoter is then forever shackled to the portal or other source for raising their capital.
One can’t tie up their business and their ability to succeed in business by giving that much power to a third party. After all, part of the reason that people go into business is so that they can be independent, and people who want to remain independent need to have their own means of production. If you don’t retain control of your own means of production, which is in this case the ability to raise capital, then you can’t be independent and successful in business for yourself for very long.
So it’s my supposition that the portals have this backwards. The portals need to promote brands. They need to promote or provide a platform for seasoned and sophisticated syndicators to continue to find investors in a new way. Now, some people would say those are exactly the people that don’t need to find new investors. But precisely the opposite is true. All promoters & all dealmakers always need to find new opportunities, new investors, and new capital. Andy it’s those promoters that should be show-cased in a platform. That makes a lot of sense to me.
It’s for this reason that Bullseye Capital MarketPlace Partners has structured its portal, not around deals, but around dealmakers. Where other platforms are curating deals, we’re curating dealmakers because we believe that the brand that the dealmakers have created is ultimately what makes the most sense.
It’s not a scalable of a model for these portals to curate and manage and underwrite every single deal and toss out 99 out of 100 of them, but what is sustainable is to vet and understand what the dealmakers are about and then give the dealmakers great latitude in their dealmaking process using the skills that they bring to the table.
Not long from now, the model will shift away from curating deals to curating dealmakers. And we intend to be on the forefront of this transition.
The Bullseye Capital Fund is an opportunistic buyer of multi-family and commercial real estate that partners with accredited investors who participate in profits. Using our expertise, vast network of resources and experience, we select, fix and profit from distressed assets nationwide. The Fund generates revenue in three ways. Our Value-Add Group optimizes, renovates or otherwise adds value to real estate projects where profit can be realized within one year; our Arbitrage Group uses technology to find and flip parcels for small, but frequent and immediate profits; and our non-performing loan group buys, modifies or repositions non-performing loans for resale. These strategies, combined with our property picking and negotiating skills enable us to produce strong and consistent returns for our investors and partners. For more information, please go to: www.bullseyecapfund.com.