You must manage your offering in a transparent and professional manner in order to have any chance of success with the crowd. The wisdom of the crowd will be among the most powerful of due diligence tools that will be available to prospective investors. You need to understand this, so you can appropriately plan your campaign.


Here is a list of the most important things to remember when it comes to putting together a compliant crowfunded offering.


1. Credibility Kit


Company Overview: First and foremost in the credibility kit is your company overview. Your goals, your philosophy and how long you have been in business and so on. Your company overview will let people know what you do and your investment approach. Enlighten them to your expertise in the note and real estate marketplace.


Put together a bio on the principles of the company. Tell a little bit about yourself and your story. Remember, the people who are reading this information will want to feel good and feel comfortable with you. Your bio on your principles is almost like a resume. People want to know your background. Tell a good and truthful story.


A clear and persuasive, specific and detailed, written business plan is also essential to be presented to investors if you are to be successful in any fundraising effort online or offline. Developing the plan is a demanding exercise and will likely take many revisions, as pieces of the business plan are thought through, refined and committed to writing.


The plan should describe the business, the principals of the business, and the market niche that makes the project a logical business endeavor. It should describe how the note or real estate project will generate revenue, its overhead and other costs of doing business, and how it will generate profits.


It will also need to outline the capital required, the plan of operation for the business, and the specific uses for the funds. Include any historical financial information for your business as well as a budget and financial forecasts.


Be sure the plan is well thought through, and answers all of the obvious questions. What is your business? How do you make money? How and when does an investor get their money back plus a return on their investment?


Determine Deal Terms: Every parent loves their baby, and note and real estate entrepreneurs are certainly no different. Nevertheless you must establish reasonable terms and conditions under which you are willing to do a deal. Be realistic, and be prepared to defend the terms, because you will most likely need to respond to investor questions in this regard.


Choose a Platform: Choose the crowdfunding platform that is right for you and your project as crowdfunding platforms are different in a variety of ways, such as their mission, their fees, their niche market and their following. (See the listing of a number of the leading real estate crowdfunding funding portal in Appendix)


Crowdfunding platforms should be seen as sales channels, even if we refer to the fundraising technique generically as crowdfunding. Sales channels often specialize in a certain type of product. You would not consider raising money for a real estate project at a high-tech startup venture capital conference, would you? Think of crowdfunding platforms in the same way.


Engage Legal Counsel: Review your offering with an attorney familiar with crowdfunding and securities laws in general. Because crowdfunding is a relatively new development in securities law, there are many experienced securities attorneys who are not yet familiar with this new legal territory, and lawyers will be one of the groups whose business model will be disrupted by crowdfunding.


Be aware that experienced lawyers from large law firms may have difficulty handling crowdfunding offerings in a cost-effective manner if they have not done such an offering before. Attorneys with experience in the area will often be able to provide comprehensive services in structuring a crowdfunded offering on a reduced-fee or fixed fee basis, as they have previously-used forms, and checklists that they can utilize to make the work process efficient.


Develop a PPM: A private placement memorandum, or “PPM” is not specifically required, but it is a good idea to prepare in order to outline the risks for the investors and protect the principals from litigation and liability after a project is funded. The PPM is a significant document and usually takes many hours to prepare.


Get your Documentation together: You will need to disclose to prospective investors all of your corporate formation and operating documentation. For a corporation, this will include the articles of incorporation, bylaws and shareholders agreement (if there is one). For a limited liability company, this will include the articles of organization and the company operating agreement. Pull all of your company’s formation and operating documents together and consider whether they will need to be modified before you begin a crowdfunded offering.


Develop a Social Media and Marketing Campaign Plan: A marketing plan to draw attention to your offering is equally important to any other step we recommend, and is vital if your offering is likely to be funded. There are consultants that can help you spread the word among you network, some with experience and many without any crowdfunding experience because it is so new.


2. Private Lender Book


The documents your lender receives from their investment.


This is a very important book that you must prepare. If you elect to crowdfund your project, this book will be virtual in the sense that all documentation will be posted online at the Funding Portal, but in any case the documentation will be quite similar. It is a comprised of the actual documents from the note or real estate transaction that you will give to the private lender who has made the investment on that property.


What is very important about the Private Lender Book is that it puts the prospective private lender’s mind at ease knowing he has the information on a specific piece of property, in an all inclusive three-ring binder. Besides that, they will proudly show it off and lets them know how safe and well invested they are, thanks to you. A potential referral is thus developed.