Jacob Blackett, Syndication Pro
Creating Better Technology to Raise CRE Capital Online
Jacob Blackett, Founder of Syndication Pro
Tapping into the subconscious mind of the investor using FOMO - The Fear of Missing Out - is one of the tools Jacob Blackett's product, Syndication Pro uses to help his developer clients raise capital.
FOMO speaks to the natural desire to want something that everyone else has. It creates a response that drives people to take action and can be stimulated when that something is in short supply.
SyndicationPro is a back-end investor management system that has built into their platform a FOMO function: the 'investment reservation' option for when a sponsor is in-between deals. Learn more about it in today's podcast.
What You're Going to Learn
- How When You Build a Good Thing It Grows by Word of Mouth
- How Real Estate Sponsors Can Overcome Hurdles through Automated Systems
- Why Tech Savvy Sponsors Are More Likely to Adopt Technology Changes
- How Sponsors Can Attract Investors and Pre-Fund Real Estate Deals
- How Sponsors Draw Interest to an Investment Reservation System
- What Early Experiences with Keen Real Estate Investors Are Like
- How to Send Out an Invitation to Make a Reservation on a Real Estate Deal
- How Jacob Raised $5.5 Million of Capital on a $2 Million Capital Target
- And much more!
Listen To or Watch the Full Podcast Here
FOR REAL ESTATE DEVELOPERS
THE WHITE BOARD WORKSHOP
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When You Build a Good Thing It Grows by Word of Mouth
ADAM GOWER: Jacob. Thanks so much for joining me today. It's great to see you again. We had a fascinating discussion last week about the fear of missing out. So we're going to talk about that a bit today. So, anyone that's listening. Stick around for that because that's an absolutely fascinating topic. And, Jacob at Syndication Pro, has a tool that triggers that response in investors. So, it's certainly something you want to stick around for but before, Jacob, we get into that, let's start talking instead about, Syndication Pro. And actually, you know, my interest is in figuring out how you find clients. Right? How do you use digital marketing to reach developers because we're both going off to the same market for different reasons so I'm dying to know what you do to find clients and what works best. Totally selfishly, I want to know that.
JACOB BLACKETT: Yeah. Yeah, that's great, Adam. So, quite honestly, the bulk majority of Syndication Pro clients. Early on, it was my fellow colleagues. So, I am a fellow sponsor, a fellow real estate sponsor. And so, I was well networked-in with other colleagues and other firms. And so, that's where the ball got started. So it's very close knit. Just friends and colleagues in the space, doing what I did, managing real estate firms and syndications and raising money. And so, just a handful of early users got the product going and as you probably know, Adam, when you build a good thing, the most powerful thing that comes along with that is word of mouth. Right? And so, the vast majority of our growth has been word of mouth. There's certainly people who find us organically just searching syndication platform or investor portal or something to that effect. So, a lot of people find us organically but certainly our biggest growth driver right now is word of mouth.
How Real Estate Sponsors Can Overcome Hurdles through Automated Systems
ADAM GOWER: So, that's one factor, is the benefits of being able to conduct business online and obviously everything that's going on at the moment is a catalyst for that. It just accelerates that natural growth anyway, that you described. But one of the biggest challenges that I find sponsors have or developers have, is while the idea of automating and saving time is very compelling, the time it takes to automate is an overwhelming hurdle. I don't have... I know it's good for me and I should do it. I don't have the time to change everything because you're changing decades-old practices. So how do you guys overcome that when somebody comes to you and says, "Yeah, Jacob, I really like your product, but I'm so slammed at the moment, got no chance".
JACOB BLACKETT: Yeah, there's a couple of approaches to that. So our team has become very good at migration and onboarding. So, it's what we refer to as a "white glove service" where we set the infrastructure, we set up the data, we put everything in place so that the the developer or the sponsor, the real estate firm, they can come in and now just focus on how to use the tools. And, I think one thing that really differentiates us is that, it's simple and intuitive, the product that we've delivered. And so, a lot of early investor portals and currently, unfortunately, are a bit clunky and complicated. And so, I think that's a big holdback in what we've seen for people to adopt those current portals that are out there. And one of the biggest feedbacks that we continue to get is the ability of the firm to jump in, understand and intuitively use the product, their team to actually use it. It's a cornerstone of our development is the simplicity and ease of use.
Tech Savvy Sponsors More Likely to Adopt Technology Changes
ADAM GOWER: When somebody comes and signs up with Syndication Pro, do you notice that they have... obviously they've taken that step and they've decided that they are going to automate and invest both time and money in order to save time and money and also the liability issues, etc., etc. that we know about, you've already alluded to. But, do you notice any particular characteristics in the sponsors who are more amenable to signing up for Syndication Pro than those who are not? And that might be, for example, yes, the ones that have been in real estate for less than 10 years, jump on it. Those that have been around for 30 plus years, they're the hardest to sell to or something else. Is it, do they have better website presence? Do you notice that they have strong social media? Are they more tech savvy in general? What do you notice about them, as a class?
JACOB BLACKETT: Yeah, hands down, those who are... who seem to be more tech savvy, who might have more polished looking websites, who are adopting technology, are fast movers. They are clients who will sign up and start using and subscribe and they self-serve through the entire process and when we ask them if they need help, they say, we love what you got here, nothing needed now. And then, the other end of that spectrum is someone who had their website built out, its a 20 year old website.
ADAM GOWER: It's steam powered.
JACOB BLACKETT: Yeah, yeah. It's like, kind of, give me the step-by-step, more training, more hands-on, which is fine. But yeah, there is a pretty vast difference of the customer profile and adoption.
How Sponsors Can Attract Investors and Pre-Fund Real Estate Deals
ADAM GOWER: So now you've got a sense of the characteristics that a sponsor has from a tech perspective, or tech acceptance perspective when they come on. But what about their best practices for actually raising money or attracting investors? What do you notice about those that do best on your platform?
JACOB BLACKETT: I think a very powerful feature that those who have a lot of success raising money online is really capturing the interest of the investors and the leads prior to the deal actually being available to invest in. So, I think those who I see are most successful, basically pre-fund their deal, in a sense. They do a good job of getting the interest, getting people lined up and ready so that when the deal is available to invest, those investors are taking action because they don't want to miss out. Right? They want to be a part of the deal.
ADAM GOWER: Well, so that just begs the question, how do they line up those leads? That's what I'm getting at. How do they do that? What are they doing so effectively that's really moving the needle for them?
JACOB BLACKETT: Yeah, yeah. We found this very powerful. I found it directly very powerful because, of course, I raise money for my own deals. And so, we created the infrastructure where you can post a reservation directly through the platform. You can drive traffic to this reservation, all of your leads and prospective investors where they can basically get a teaser of the deal, what's to come, and they can place a reservation or a soft commit. Basically, they're getting on the waitlist for the deal when it's available to invest in because, of course, most real estate sponsors and developers, they're not.... most of the time they're not raising money. It's this in-between time that's really important to get everyone in line, so, this gives our clients the ability to get the ducks in a row and also investors love to be able to get that sneak peak. They're able to see what details are available on it. They get one foot in the door with that reservation. We typically tell our clients to frame it up that this is an opportunity for their investor to secure priority in the deal. So, it's their ability to get a priority to invest over anyone who doesn't make a reservation. So they're incentivized to do this. But, it's very powerful. It gives the sponsor a list of everyone who has made these soft commitments, these reservations on the deal. Very user-friendly and easy for the investor and very powerful.
How Sponsors Draw Interest to an Investment Reservation System
ADAM GOWER: How are you seeing sponsors are filling that pipeline with prospects and with investors to whom they can send an invitation? It's no good having a reservation system if you don't have prospects. So how are they doing that? What are you seeing are best practices for sponsors to get people into the reservation system?
JACOB BLACKETT: Yeah, it's through email. So there's a direct link to the reservation. And so, that way you can garner that interest. You can share that link via email. A lot of the times, your contacts, your investors, they'll end up sharing, forwarding along the email, right? And so, you're able to pick up referral leads through that as well. But, it's primarily through email.
ADAM GOWER: Do you see them using social media or advertising online or other techniques to kind of troll for prospects?
JACOB BLACKETT: Yeah, it depends on the customer. But, if our customer is doing an offering that allows general soliciting, then yeah, that's where maybe I see it on my social media scroll and I click and say, oh, that's cool. That's our platform and it's more out there. Other clients who don't generally solicit are primarily sharing the link with their current "closed book" of contacts, via email. But yeah, it definitely can be out on those different channels.
Early Experiences with Keen Real Estate Investors
ADAM GOWER: Alright, so let's talk about the fear of missing out a little bit and why the idea of the reservation system works. First of all, how did you come up with this idea? Tell me a bit about the background, because it is, as far as I can tell, it is unique, at least the way that you deliver it. How did you come up with that idea?
JACOB BLACKETT: It comes out of direct experience and I think a lot of our unique features are developed this way. But, back in 2013, 2014, when I was raising money for my own real estate deals. Still do today, of course. I was in that position where I wouldn't have a deal for a few months, but I kept having these new calls with new prospects, new investors and I was thinking... Because at that point they've already found me. They've signed up with me. Now we're having an introduction call or meeting and I got tired of saying, OK, well, we'll keep you updated and just wait for our next deal to be available. I wanted, what was the next step? What was the next step in that process and I thought that, if we were just able to get a teaser out there and take reservations.
Sending Out an Invitation to Make a Reservation on a Real Estate Deal
ADAM GOWER: So, what are you actually communicating when you send out an invitation to make a reservation?
JACOB BLACKETT: So, at its infancy, when you don't have a deal, you honestly don't even know what your next deal is going to be. At its infancy, it could be broad-based. So, for example, for me, our firm purchases multifamily apartments and so, when I have that reservation and I don't have that next deal, it's just speaking about our next multifamily investment. It's talking about where, maybe our regions where we invest, the types of deals we purchase, the types of targeted returns that we target for our investors. Maybe it has a little blurb about our experience, our track record of delivery, and then maybe I include a little slide of my most recent deal so that they can get a taste of what the last deal was, and then that's usually at its infancy, kind of a broad-based, open-ended reservation.
ADAM GOWER: OK, so it's educational would be one way to put it, right? And you describe your view of the world as well and how you see real estate and the markets and you're communicating with prospects effectively, right?
JACOB BLACKETT: Yeah. I like to keep it, of course, shorter, shorter than longer, short and sweet, effective. It's usually no more than 5-8 sentences. And then, as you do get that next deal, and that process is developing, you can just tailor the reservation to update it. So you're just providing a little bit more details now. Now, we might have the deal. We could get rid of some of the broadness and make it more targeted. And then, as that deal cycle develops, you can just get more and more precise. It's really easy to change those details on the fly.
$5.5 Million of Capital Raised on a $2 Million Capital Target
ADAM GOWER: You were just telling me before we started about a deal that you've just closed or just raised money for. So tell me something about the life cycle of that capital raise that you just closed, in the context of your reservation system, because that was very interesting.
JACOB BLACKETT: Yeah. So, actually our last deal that we had closed was back in April. And so, COVID-19, things are going on. We had a dry spell and so we just funded our most recent deal last week. And so, heading into the capital raise, we had this reservation open for months now. We were able to see that we had 5.5 million in reservations going into a 2 million dollar capital raise. So, we felt really good, right? It's a really nice position to be in. There's a certain level of certainty that, hey, we have the dollars lined up and so we could focus on due diligence, for example, or other parts of the deal. Not necessarily feel worried about, is the capital going to be there? So, when we got to the point of launching the deal, it was really a few, of course, email sequences to get there. Setting a time. It was noon Eastern on a Wednesday that we are opening the deal for investments. First come, first serve. Those with reservations get a priority in the deal. And by 5 pm, it was 80 percent committed and the next day, it wrapped up.
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