When you’re raising capital using syndications, every investment is tied directly to a specific deal. While the model allows you to raise capital quickly when you have a deal in hand, it becomes limiting in that you cannot raise capital from your investors until you find that next amazing deal.
Those limitations became a reality for Jon Lopez and Anthony Pimentel after they closed a major deal and were trying to find their next investment. By building a customizable fund on the Avestor platform, they were able to combine the benefits of a syndication with those of a traditional fund, creating the best of both worlds for themselves and their investors.
After closing a large syndication deal, Jon and Anthony realized they still had about $1 million of additional soft commitments. With a traditional syndication model, there’s no way to deploy that capital until you launch a new deal, which is expensive and time consuming.
“We were thinking about ways to utilize and leverage those soft commitments, but back in February, we didn’t have any deals to deploy the capital. So that’s when we looked into opening up our first fund,” Jon explained.
Since launching a fund on the Avestor platform, Nine Doors Down is now able to raise capital 365 days a year.
This model is also more affordable, saving on many of the typical costs associated with syndications such as separate legal filings, PPMs, and marketing efforts.
Moreover, the Nine Doors Down investors appreciate this new model because it allows them to fractionalize their investments, investing in more than one property if they want greater diversification.
“I think a lot of people are pretty familiar with Coinbase, TD Ameritrade, and Robinhood,” Jon shared. “That’s how I pretty much explain [Avestor] to my investors: You put your capital into a pot, and from there you can diversify.”
Jon and Anthony are currently in the middle of a capital raise for a large self-storage portfolio, in partnership with other Avestor fund managers. This is another benefit they’ve experienced through working with Avestor, as all sponsors gain access to a mastermind where they can learn from and collaborate with other fund managers.
From there, they plan to keep taking advantage of all the features Avestor has to offer, knowing that the sky's the limit.
“Our creativity is the only thing that can stop us at this point. An AUM of $500million isn’t out of the question,” Jon shared.
If you’re interested in learning more about how Avestor can help you scale, please schedule a time to talk with us.