Whether or not we’re officially in a recession, there’s no doubt that economic conditions are changing, and investors and capital raisers alike are looking for ways to prepare for the coming months.
In this environment, it’s more important than ever to make sure your fundraising model is serving you well: with the flexibility to adapt to changing market needs and the ability to reduce costs for you and your investors.
At Avestor, we’ve specifically designed our customizable fund model to streamline the fundraising process with a comprehensive and flexible solution. Keep reading to find out about 3 key ways Avestor can help you succeed in an economic downturn.
1. Reduced Costs of Setup and Administration
Traditional funds can cost $30,000-50,000 to set up, and though syndications are more affordable at first, they require you to redo your legal documents, PPM, and SEC disclosures for every single deal.
With Avestor, on the other hand, fund managers pay a one-time setup fee, which is 50% less expensive than traditional funds. We’ve reduced costs by partnering with top-tier firms and negotiating volume discounts on behalf of our fund managers. And unlike a traditional syndication, our funds are evergreen, so you can continue to add new deals over time under a single PPM and legal entity.
During a recession, these cost savings are more valuable than ever, so if you’ve been considering setting up a customizable fund, now is the time to take action.
2. The Flexibility You Need to Pivot
Traditional fund and syndication models are extremely rigid, making it difficult to adjust your business model in response to the economy or expand to new asset classes when you see an opportunity.
With Avestor, on the other hand, you can include multiple asset classes within one fund. Our customizable funds also give you the ability to adjust your business model on a deal-by-deal basis, or change your entire fund model in the future if needed.
3. The Opportunity for Investors to Diversify
In seasons of economic uncertainty, investors are typically much more hesitant to make new investments. But with a customizable fund, you can decrease investor risk while increasing the opportunities for diversification.
Imagine, for example, that an investor has $50,000 to spend. With the high investment minimums of traditional syndications, that investor would most likely only be able to participate in one deal. And if that deal performs worse than expected, they’re in trouble.
But with a customizable fund model, investors can fractionalize their investments across multiple deals. The investor with $50,000 to contribute could, for example, invest $20,000 into one deal and $10,000 each toward three other deals. This diversification significantly decreases their level of risk, and it’s a selling point that can turn hesitant prospects into confident investors.
If you’re interested in learning more about Avestor’s solution and the ways it can help you navigate this period of recession, please contact us today to schedule a demo.