Funds on Fire
Welcome to Funds on Fire, hosted by Devin Robinson—a seasoned fund manager with years of experience launching, managing, and scaling multiple successful investment funds. Devin has also helped numerous entrepreneurs ignite their own fund ventures. This podcast is your go-to guide for mastering the world of investment funds and capital raising.
In each episode, Devin dives deep into the essential aspects of fund management, SEC compliance, and strategic capital raising, sharing the insights that have powered his own success. Alongside solo episodes filled with practical advice, you’ll hear from top fund managers whose funds are truly on fire. These industry leaders reveal the strategies, tactics, and stories behind their remarkable success.
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Funds on Fire
Securities Law Simplified with Seth Bradley | Ep. 3
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When Seth Bradley says, "It's all good until it's not," he's cutting to the heart of what every capital raiser needs to understand about securities law. As both a practicing securities attorney and successful fund manager who's raised tens of millions personally, Seth brings unique dual perspective to the often misunderstood world of investment funds.
The podcast delves into the dangerous misconceptions that trap well-meaning real estate entrepreneurs. That casual arrangement where friends wire money to your LLC for real estate deals? Potentially illegal. The popular co-GP model where you're raising capital but not making management decisions? "Dead" according to Seth, as market downturns expose non-compliant structures through investor lawsuits.
Seth breaks down the critical distinctions between 506B and 506C offerings with remarkable clarity, explaining why a pre-existing relationship matters and how fund structures can evolve. The conversation takes a fascinating turn toward industry innovation as Seth discusses his role with TribeVest, which has revolutionized fund creation by handling everything from legal documentation to investor relations for a fraction of traditional costs.
Perhaps most compelling is our discussion about the massive disparity in private equity, where historically 98.3% of investments have gone to white men. Seth offers straightforward advice for underrepresented groups entering fund management: "Be confident and don't be intimidated." This episode provides both the technical knowledge and strategic guidance needed to navigate the complex world of compliant capital raising.
Ready to ensure your fund stays on the right side of securities law? Follow the podcast and visit fundsonfirecom/founders to access the free Fund Foundations 101 course that will help you launch and scale your investment fund the right way.
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Episode Introduction & Seth Bradley
Speaker 1I've raised tens of millions of dollars myself as well as we purchased. Just in 2022 alone, I was a GP on over $120 million worth of commercial assets. We don't want to say anything that might get us into trouble. I'm an entrepreneur first, so I'm out there to educate. You started going down, you started seeing some people get in trouble, but all along the way on that rise up, he's suing anybody because they've been getting their returns and everybody's been crushing it. And even if you're a terrible operator, you've still been crushing it because the market saved you and nobody's getting sued. So it's all good until it's not.
Speaker 2Welcome to Funds on Fire, the podcast that ignites the passion of investment funds and capital raising.
Speaker 2Here we turn the complexities of fund management into clear, actionable steps that drive results. I've invested into diverse real estate across the United States and managed thriving funds, and I'm committed to transforming lives through the vehicle of investment funds and helping others to do the same. Join me as we document the journey of scaling businesses, raising capital and impacting tens of thousands of people around the world. My name is Devin Robinson and welcome to Funds on Fire. On this episode of the podcast, I actually interview Seth Bradley, who is an SEC attorney and has become a really good friend of mine. So him and I met a couple of years back at Raise Fest, which is, we're part of, a mastermind for capital raising and fund launching, and then both of us, as we've become friends, as we did this podcast, interview gosh a couple of months ago, and then now I've launched the podcast, and even since then this is pretty cool Him and I have actually started a partnership on helping people to launch, manage, scale and raise capital for investment funds, and it's something really cool, and so you'll hear more about that later, but it's really cool that it started with this podcast. We both are very like-minded people. We both have very similar goals and desires, especially when it comes to capital raising and the access to information when it comes to that, and for other people to be able to learn how to honestly be able to launch and scale an investment fund, do it, have the skills and the knowledge to do it, but don't have the opportunity to do it or honestly, just think it's too hard to do. And so I'm so excited because partnering somebody like Seth is incredible. He's a guy who has helped hundreds of people to launch and manage their funds, or just really launch their funds. He has raised hundreds of millions of dollars and invested into hundreds and hundreds of millions of dollars worth of real estate himself, and so to be able to partner with him on something like this is really, really awesome. So I'm excited for that. As we talk through his journey, talk through all the things, as we go through his progression from just being a real estate attorney to then an SEC attorney that goes and helps people to launch and manage funds, his involvement in that, some of the things he's doing, and, honestly, it's going to be a really good conversation for you all to hear how to stay compliant, how to make sure that you guys are raising capital appropriately, how to make sure that you guys aren't going to get in trouble with the SEC because of how you guys are raising capital.
Securities Law Fundamentals
Speaker 2So excited for this, really pumped for this episode, just thought I'd give you a little preface before we dive in. You are going to want to listen to this because he is awesome and I'm excited. So thank you so much. Enjoy the episode. All right, what's up? And welcome to this episode of Funs on Fire. I love this because today we have a friend of mine, seth Seth. We go back, I don't know like at this point, I feel like it's like two years now or a year and a half. We met at Raze Fest a while ago and I'll tell you I was super impressed by this dude because we met. We met at a bar. We were like at this event.
Speaker 1Don't hold that against us that's right, that's exactly right.
Speaker 2We're at this event for race fest and, like I've gone downstairs, he was chilling, I was chilling, we started talking and I was like I like this dude because one, he's not like the typical, like white dude that's here, he's all tatted up, he's really cool. And then I realized he's not like the typical white dude. That's here, he's all tatted up, he's really cool. And then I realized he's by far the smartest in the room and I was like yo, seth is the man.
Speaker 2So, seth, I would love for you to tell people who you are and what you do. I've enjoyed keeping up with you over the years. Content you're putting out is incredible, and so, if you haven't, give this man a follow, especially if you want to stay compliant with funds and the legal aspect of it, because he's doing some really awesome stuff and I love how, just like fit you and your Wi-Fi that's pretty cool too. So I respect that too. So, seth, like me, tell people who you are, where you're from, what do you do, because I think it's going to be important for people to know you.
Speaker 1All right, man Devin. I appreciate that intro, brother. Yeah, it was great meeting you back in the day. Now we've kind of followed each other on social media and kept in contact and loved it. Love it, man, love it.
Speaker 1But I'm a securities attorney, so anytime you're raising capital from passive investors, you can get me involved. I've got the pedigree. I worked in big law for seven years before starting my own boutique law firm. I think what people like the most about working with me is that I actually come from the business side as well, so I'm a syndicator and a fund manager myself. So, you know, I've raised tens of millions of dollars myself as well.
Speaker 1As you know, we purchased just in 2022 alone I was a GP on over $120 million worth of commercial assets. So you know I come from not just the legal side but also the business side, and I look at every single deal like you know, whether I'm, you know, actually an equity holder or I am just the vendor as the securities attorney, I look at the deal like, hey, how are we going to get this thing done Right? A lot of attorneys kind of get in the way. I don't want to get in the way. I will tell you what the risks are, what your liabilities are, what you might be opening yourself up to, what the gray areas are. But at the end of the day, you're the business person and you're the entrepreneur, so you make the decisions based on the information that I give you. So I'm there to help you get the deal done.
Speaker 2That's cool, man, because I know, man, there's a lot of misconceptions about funds, and so one I could tell you I really appreciate you because I have had some not so great SEC attorneys that I was not a big fan of Then. I've had some good ones, and so I'm thankful for it. And so, when it comes to that, we're going to talk about compliance, because that's super important, but we'll also talk about because I guess. So I'm in another mastermind I think I was going to bring this up a little bit later, but I'll bring it up now and I want to talk about the importance of finding a good attorney because, like, I'm in a different mastermind and it's more of an operators based mastermind, like how to a lot of single family things?
Speaker 2And I talk to people and I'm like because I'm gonna set the groundwork for this podcast, but I talk to people and they're like oh yeah, I've got some friends, they've let me borrow some of their money and I'm just using that money and I'm like, oh, hold on, what do you mean? And so I talked to like I mean, I can't tell you the last part. I was there two months ago. Three people told me this Seth, three people and so they were like. They were like yeah, so I have an LLC and they wire the money into my LLC account. It's like three or four friends they wire this money into my LLC account and then I use it and I give them a return and I'm like you need to call an attorney right now because you are literally violating securities law, like you.
Speaker 2You, you are, and they're like wait, wait, wait, okay, but but what if? What if they say we sign up, you know a promissory note, they put it in here, and I'm like security. And then they're like okay, but what if they the the, the people hold it in escrow, our attorneys hold it in escrow. I'm like security and so like, just to even like, set the groundwork, what is like, what is a security? And what do you see most often when people come to you and they're looking for an attorney and they're like, hey, I'm doing this, is this legal? And you're like no, that's not legal. But what do you see Like, what is a security? And what is a misconception or the mistake that you see a lot of people make when they come to you?
Speaker 1Yeah, I mean, you just said it. So the number one problem, or the biggest problem I see every single day, is just the lack of knowledge, like people just don't know and there's maybe a fine line there between not knowing and not caring enough to know.
Speaker 1Right, exactly, you're like I know I'm doing something here and I don't care to look into it a little bit further to figure it out. It a little bit further to figure it out. But that's really what it comes down to is just not having the knowledge, because you think, like you know, I'm just going to. You know, me and this guy are going to partner, he's going to give me all this money and they're not going to do anything and they're going to expect a return on their investment and all that kind of stuff and it's all good, but it's not. You're getting yourself into issues you know. To define a security in layman's terms, I like to just say look, if you've got a passive investor involved in your deal and they're expecting a return on their money and on the actions that you're taking as the active participant, then that's a security and that's it Like. If you have a passive investor meaning they're not making decisions, they're not managing, they're not helping you out on the active side that's a passive investor and you're probably dealing with the security.
Speaker 2Right, and this is what I think separates, like syndication from the fund, right. So like, if you have a syndication and then you have somebody who brings the capital, typically they're making some of the decisions, which makes them a little bit more active. So then it's not in that sense of violating that securities laws if it's either like one person or even a couple, a group that's actually making decisions on that. And I guess that's not the main differentiator between a syndication and a fund. But I think that's where people get confused is the passive part of things.
Speaker 1That's right, that's right, it's the passive part of it right. Like you have people that come in, whether it's a syndication or a fund, if they have some sort of managerial rights or meaningful voting rights. Because you'll see, if you invest passively in a deal and you read through the PPM and the operating agreement, you'll see that you really don't have any rights to make any sort of decisions. There might be some convoluted way that you might be able to get the manager out if A, b, c, d and F happens, but probably not. So you'll see that you're really passive, right. And if you're passive, then that's a security that you're dealing with. You're investing in a security.
Speaker 2Well that's cool and I appreciate us standing that groundwork, because I want people to listen to this, I want people in my mastermind to listen to this, I want people to just hear and understand that more oftentimes, like more than you think, there are people clearly violating SEC, like security law, and so I just want to make sure that people are compliant.
Fund Structures: 506B vs 506C
Speaker 2And this is like you mentioned it earlier and I think that's really important is just the lack of education side of things, and you and I talk about that. We talked about this before. This is like really there's only like two main educators in this space that are doing this, and unless you know those two, you run the risk of not really being honestly educated enough to run a fund unless you have the self-education side of these. And so I love, like what you're doing and the content you're putting out, especially from a securities attorney aspect, to be able to help that. What have you seen has been like the main sources of education? Because even just like outside of what I do, outside of what you do, are there other sources of education since you've been in this space longer than me that people can go to to gain more information about what it looks like to raise a fund or even start looking in that direction.
Speaker 1Yeah, dude, it's tough out there, right? You just said it and I'll just name them. I mean, hunter Thompson has some really good content, that he puts out.
Speaker 1Love Hunter, super intelligent guy, great stuff. It's about raising capital for real estate specifically, which is great for your audience. And then Bridger Pennington of course his is a little bit not necessarily real estate related, more in the private equity space, but also real estate sometimes and those are really the only two guys that are putting out content. Typically, before them you're really getting your education from your securities attorney that you engage with. They're going to give you legal advice. They're not going to give you kind of like they'll review your marketing materials and things like that to tell you, hey, this is compliant, this is not. Maybe this is what you should do, this is what you shouldn't do.
Speaker 1But there's not really anything comprehensive out there where you put the whole package together when you're really trying to start a capital raising business, other than those two guys right now. You know there's a lot of room in that space for people to step in and do it. And also you know securities attorneys. If you look, I mean there's only a few of us putting out any kind of content because you know, as an attorney, most of us are pretty conservative. We don't want to put ourselves out there, we don't want to say anything that might get us into trouble.
Speaker 2You know, I'm an entrepreneur first, so I'm out there to educate. Well, and that's what I was going to ask. So, for you, man, just like a little bit about your journey, because, like, it's not every day that you meet a securities attorney.
Speaker 2Now, granted, we are at a fund event, so then like, of course you're going to run into a securities attorney but like, honestly, you, you, I feel like and this is kind of cool I feel like me and you don't fit the molds of our role, like for like, we're tatted, like you know, like you know what I'm saying we're tatted, we're a little bit more laid back. I got I think I posted this the other day I graduated college with a 2.3 GPA, like like I just am not very qualified of what you would put.
Speaker 2The normal qualifications of a fund manager would be. But for you like for you. How did you get started and what drew you to securities law? Because it's a very specific niche to be in, for sure.
Speaker 1Yeah, and I really got started in real estate law. So I was always drawn to real estate. I just knew it was a great investment. I've just intrinsically loved real estate. I don't know what it was. Even when I was an undergrad I was like man it would be so attracted to it and investing in it. So I started investing in it myself. I started out doing real estate transactional law from that perspective and then I realized that raising capital was a little bit more sophisticated. I liked that aspect better and started gravitating towards that and got into securities law. And again at the same time as I was doing that, I was also starting to syndicate my own deal. So pretty interesting that I got kind of the legal side, got the business side going at the same time. So it gave me really good perspective.
Speaker 2That's cool. So you talked about your journey a little bit. I love diving into that journey because you said that you were in on some of your own deals. So you started as real estate attorney. Chopped that, like, started doing that. Were you like a closing attorney? Yeah, yeah, okay. So like a closing attorney? And then started did you get to a point where you're like, yo, I see all this money that people are making, I kind of want to do that. Is that how it like switched into you becoming an active investor into real estate.
Speaker 1Yeah, somewhat, man, I mean, I took kind of the traditional route of real estate investing. I read Rich Dad, poor Dad, I started listening to Bigger Pockets. The Purple Bible. You know it, man. That's what it is yeah, did all that and house hacked into a duplex. I mean, that was my first property. Started fixing and flipping a few properties. Still own some single family, those sorts of things. Now you're in San Diego right, I'm in San Diego, yeah.
Speaker 2But I'm originally from West Virginia, west Virginia.
Speaker 1West by God, virginia, that's right.
Speaker 2All right, I mean like I feel like if you're, I feel like if you're from there, you would say something like that. That does make sense.
Speaker 1That's the saying. That's what we say West by God, Virginia.
Speaker 2No, I don't know anything about West Virginia, but now I do. So now do you own some of your properties in two very different markets West Virginia or San Diego. Is that where you own them, or are you in other markets?
Speaker 1They're all over the place. So we invested. I lived in Charlotte for a little bit, like you know, so I own a couple of properties there. I own a property in West Virginia that duplex that I was telling you about because I moved there for a job. Really, california is tough like to make anything cashflow there's some ADU opportunities right now for that but really just own the house that I live in. Then I have a condo that I rent out up in Orange County and that's about it, but the other ones are all kind of all over the place. Like we invested in Cleveland for a little bit as well.
Speaker 1Oh yeah, some multifamily stuff in Cleveland that was kind of in the single family phase but as far as, like, the multifamily, the retail, a lot of that was like in the Midwest, in the Sunbelt area, so all over the place and we did like industrial.
Speaker 2we did retail, we did multifamily, all sorts of stuff, man on the commercial side, and it's good to know that background for you, like not that background, but like you had the ability to understand and how to structure some of those deals. And so I'd love to, I'd love to talk about the structure of funds a little bit, because this is I'm going to ask the question that I think, like everybody wants to ask an SEC attorney about the difference between a 506B and a 506C, and then what constitutes, like, having that preexisting relationship? Right, because, like, if you have a 506B or a 506C, there's certain stipulations, but those are the two most common. Like 90% of funds are 506Bs or 506Cs, and so, if I'm wrong, just let me know. But I believe that's like the statistic and with those, what constitutes the differences? And then the pre-existing relationship part is one that a lot of people have questions about.
Speaker 1For sure, man. Yeah, you're spot on so far. I mean 506B, I like to remember, by buddy, so it's typically going to be a buddy, right, like you have to have.
Speaker 1So the rule isn't that you have to have a pre-existing substantive relationship. The rules are not allowed to solicit or advertise. That's the rule. And the way that you show that is by having a pre-existing substantive relationship with those investors. So that's a little bit of a nuance there. The rule is really you can't solicit or advertise. You can't go on Facebook and talk about it. You can't take out Google ads and put it out there. You can't even talk about it really to strangers and invite them into your deals. You have to have that pre-existing substantive relationship because otherwise, think about it, how would they know about your deal if you didn't? That's kind of the mindset there.
Speaker 1So B, but the advantage there, of course, is that you're allowed to bring in 35 non-accredited investors. So that's why people go with the 506B route. Number one you can bring in a limited number of non-accredited investors. Number two, there's less requirements for you as the fund manager or the syndicator, the capital raiser, on proving if they're accredited or not, because they just self-certify. So those are really the two big reasons you would choose a 506B versus a 506C, which you can remember that by community. So it's a bigger pool of people. Right, it's a 506C for community those folks.
Speaker 1When you have that exemption, then you can go out there to your community, you can solicit, you can advertise, you can put it on facebook, you can put it out there in your mastermind and go speak on stage and say, hey guys, come invest in my deal. You can do whatever you want. Really it gives you the freedom to operate and not feel like, oh, am I doing something wrong? But obviously the big thing there is accredited investors only. So if you choose that 6C exemption, you're only allowed to bring in accredited investors and you're also going to have to take reasonable steps to verify that and that's typically through a third party vendor or through that investor's attorney or CPA that's going to write them a letter that says that they're qualified.
Speaker 2Yeah, which typically and not typically, but like this is why you see even older, more established funds go with a B, because it's easier to just bring them in so they don't have to do all that stuff.
Speaker 1Yeah, what you see is they'll do a 506B, but they won't allow non-accredited investors in. So it'll be 506B, but only allow accredited investors, so that they don't have to. They don't, they can self-certify. Yeah.
Speaker 2Which just makes it just a whole lot easier with paperwork standpoint. So then that's which is really, really interesting.
Speaker 2So for me and I'm actually I'm going to just dive in a little bit deeper, because there's so much gray here and, like you can, it's fine if you don't bring any like clarity to the situation. But there's so much gray here because I hear people that are like, all right now, when you meet that person, add it to your calendar that you met that person and then you could talk to them three weeks later and then like then you could pitch your fun to them and then like, then now you're showing the sec that it's a pre-existing relationship. And then it's like well, where the heck is the line if there isn't even a line? And then it's like then then what do they, what does the SEC expect me to do? You know, if somebody introduces me to somebody, how the heck do I make sure that I'm compliant in that, in that relationship that we have, if I know that they even come into the relationship interested in what I'm doing? I want to take a quick second to talk to you guys about something that could completely change the game for you.
SPVs and TribeVest Solutions
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Speaker 1Yeah, pre-existing actually just means pre-existing the offering, so pre-existing your syndication, pre-existing your fund. So that makes it a little bit difficult when you've got, let's say, an evergreen fund, right.
Speaker 2It's like well, you've got that offering open forever, right?
Speaker 1So you can't even bring anybody in after you've opened it. That you don't already know. But there is a kind of a loophole. I'll call it. It's not really a loophole, it's actually a regulation. But you can actually convert a 506B to a 506C now. You didn't used to be able to do that, but I think that passed, maybe like two or three years ago, where you can convert the 506B to the 506C. Now you can't go back after that, but once you make that conversion, get all your 506B investors in. If you want to fill that 35 non-accredited pool and then convert it to a C, you can do that. And then you can go out and you can solicit, you can advertise, you can talk about it, you can bring in strangers.
Speaker 2Yeah, now, that's really interesting too, and I do know that, and I think you just have to close subscription for like 24 hours, right, or something like that, and then you can open back up. Yeah.
Speaker 1There's not really a time requirement. You'll hear something. You'll hear where there's like a cooling off period and they'll say 30 days, 60 days, but it really just comes down to closing that first offering, because it's separate, that 506b exemption offering, and then opening that new c offering and just to be safe because again we're dealing with securities, it's always gray maybe give it that 30 days to cool off and then open up that 506c and then you're good to go and you have to refile like a form d and everything like that you do, okay, you do yep, okay, cool I wonder if you're blue skies, you can use the same documents, but you'd need a new form d.
Speaker 2Yeah okay, cool, all right, very interesting. So that's cool to know too. So I use a platform and I think we've talked about it briefly called avester, and I'm a big fan because it's a customizable fund. They actually don't, I think, because of the nature of the customizable fund, they actually said that I can't close down my B and open back up as a C, just by nature of that type of fund, and I thought that was really interesting and I know you and I've talked about potentially chopping up, like what the heck is the? I think I sent you the stuff for it, I can't remember.
Speaker 2But, yeah, talking about that customizable fund, because it sounds like you know there's different fund models. There are the Reg D, 506B and Cs, there's Reg CF, Reg as, and then you also run into like syndications, and then you have fund to funds, right, and so it sounds like, and for you you've kind of done all of them, I think, but right now you're really focused on one major one, right? Is that what you like?
Speaker 1so the fund that you currently operate and you're running. I'd love to hear a little bit more about that. Yeah, for sure. So just to comment on the Avestor fund, you know it's a. It's a kind of a new product, right. The customizable fund is pretty new. It hasn't really been tested on the legal side quite yet. It's pretty complicated, right, like complicated from. Well, what it spits out is simple, right. They say, hey, you create this evergreen fund and then you get, you know, each investor only gets 1K1, even though they might be invested across a bunch of deals, things like that, which is great, but you lose that flexibility. So I don't know the intricacies of it, but you know you can imagine you've got this customizable fund that's invested in, let's say, 10 different other deals or whatever, and some of them it's acting as a fund of funds, some of them it's acting as a lead sponsor, all these different things. So trying to convert that to a 506B, to a 506C, I can see where you can run into some complications there and it might not be possible.
Speaker 2Yeah, and I think so because the structure sorry, the structure of it, they tell me what makes it customizable is the fact that, like our investors can log in and I don't actually, like I have an overarching PPM they log in and they choose their investment that they want to I'm not telling them the investment that they have to, like, invest into they read the deal disclosures and decide that that's where they want to allocate their money to, which allows for the customizability of this type of model.
Speaker 2So I think, that's where converting it to a C would be.
Speaker 1Yeah for sure, yeah for sure, yeah, that's kind of the defining. I guess piece of that customizable fund is that investor actually gets to pick and choose within your fund that you created where they invest and that actually I can see where that, why they do that. I mean it's a great concept, but also that keeps you from actually making any decisions as the fund manager, so that keeps you out of some certain regulations.
Speaker 2I'm like, hey, this is what we offer. Yep, you can look at the deal disclosures and decide on where you want. But, like they could and this is like one of the things that they like is I can say, oh, you could. You could essentially diversify your portfolio within one fund, cause you could choose this one, this one, this one, this one, but you choose how much you want to go into there. So that's, that is a very interesting model and so that's really cool. Yeah, yeah, the investor chooses it.
Speaker 1Yeah, the investor chooses it and yeah, and I'll you know that contrast to that, contrasts to what you're alluding to, which is an SPV fund of fund. So that's what we do over at TribeVest, and full disclosure. I'm chief legal officer and a shareholder of TribeVest, so I'm a little bit biased. And Avestor is, we don't like to call them a competitor. Honestly, they do fund of funds and we do fund of funds as the overarching product, but it's completely different.
Speaker 2One situation which is why I brought it up. It's the only reason I brought it up, because I'm excited to dive into TribeVest and what you guys offer, because this is not a pitch for TribeVest and, like I didn't even know about, I did know I've heard of TribeVest but didn't even know you were a part of it before this podcast, but I love hearing what you're a part of them.
Speaker 1There's a couple other groups out there that are going to be offering them. Soon you can actually go to a securities attorney and they can put it together for you as well. And then you've got the SPV fund of fund Again. You can go through.
Speaker 2Tribest, or you can go to your security attorney and SPV.
Speaker 1just for clarity special right, special purpose vehicle or single purpose vehicle kind of either one really applies. And then you've got your typical discretionary fund, which you would go directly to a securities attorney, and that's where you're actually making some decisions. You're saying, okay, I'm going to raise 10 million bucks and I'm going to invest in deal one, two, three, four, five, six, seven, eight. And you're kind of making those decisions and there's a lot of rules and regulations that you've got to abide by to be able to do that without a license. But anyways, back to the SPV, the single purpose vehicle instead of a customizable fund, where you know the investor is making the decision and you as the fund manager are. You know you make all these different things, all these different investments available.
Speaker 1The SPV is designed as a single purpose vehicle to invest in one single deal. So if there's a target deal, let's say a 200 unit multifamily property in San Antonio, we're going to spin up an SPV for you to invest as a passive investor into that target deal, and that's it. It's super simple, it's super contained, it's not complicated. It just keeps everything compartmentalized, both from an asset protection standpoint and from visibility. Right, you're going to know, as the fund manager and as the investor, exactly what you're investing in, how you're going to get paid, what your projected returns are, and it doesn't really get muddied by other investments.
Speaker 2And this is what I, because I've talked to other SEC attorneys and they've talked about it's funny. They've talked about how rare what I've done. So I've like maxed out my 506B on my first fund, being a blind fund, and they were like that's super rare, because you're saying, hey, just trust me. But what you guys are saying, what you're doing, is saying, hey, this is the specific and that makes it a lot easier to raise capital because, like you said, a ton more transparency. They know what they're investing into. And so for people starting out, that's probably the route that they want to start with is something where they can bring transparency and then the investors that they're coming in know exactly what they're investing into.
Speaker 1That's right, devin. Yeah, what you did, devin, was incredible. Like it's really difficult to do. Most people don't start there. They can't start there. They only have the ability to, to be able to build that up, that level of trust and track record prior to you launching the fund. That's why you're able to do it, but most people can't do it. Most people have to get their first few in the door by showing the investors hey, this is the exact deal that you're going to invest in and you're going to be a part of, and they can do their own due diligence and underwriting and those sorts of things. And they'll say, oh, yes, I believe in that property or that deal and I also believe in you as the fund manager or the syndicator, and it's easier to raise capital that way, as opposed to a blind pool fund where it's like, hey, just give me your money and we're going to invest in something that looks like this and yeah, exactly.
Speaker 1Exactly.
Speaker 2So I actually I want to dive into more into TribeVest because like, so where does the benefit come in? Because, like, somebody can just go in, get with an SEC attorney and create their own SPV and kind of go that route. But where's the benefit of somebody coming in and working with TriVest, like why? I mean honestly, like please tell me, like, why have you invested into it, why do you believe in it so much? And then, yeah, tell me a little bit more about it, man.
Speaker 1Yeah, because it just makes everything super simple and super contained and we handle everything. So if you go to an SEC attorney like myself, I'm going to come in and I'm going to draft your offering documents, I'm going to file your exemptions, do your blue sky filings and that's it, and I'm going to wipe my hands of it and I'll say you know, good luck, you know more than that.
Speaker 2I'll help you out. Thanks for the 50K. Yeah, exactly, I'm going to charge you a lot of money.
Speaker 1I'm going to charge you at least 25K, right? Tribevest includes everything that you could possibly imagine, so all these different parts that you would have to put together as a capital aggregator TribeVest handles. So that includes not just the offering documents, the legal stuff, the filing of the exemptions and the blue sky filings, but we're going to file for your entity, we're going to get your EIN, we're going to be your registered agent, we are going to onboard your investors. So we're going to act like an investor relations person on your team.
Speaker 1So, all you do is send us your list of investors and we start reaching out. We send them to the docs, we walk them through how to sign and get them through the signing ceremony. We hound them or we call it herding the cats to get them to actually fund the deal, because sometimes people get cold feet.
Speaker 2So we bug the hell out of them.
Speaker 1Yep, bug the hell out until they make that wire. We do all that. We do the accounting and your K-1s, we configure your cap table Very cool.
Industry Trends and Co-GP Model
Speaker 1We do your distributions, we open your business banking account. We do everything on the back end. We've got the investor dashboard or investor portal that you can use, which alone is you know you're going to pay $500 a month at minimum for that by itself. So it's incredible and we do it at an incredible price. And I mean, we're not. We're very transparent about that. It's $5,000 upfront and then $2,000 a year annually. And that comes with docs and everything that comes with docs and everything.
Speaker 2Sign me up.
Speaker 1There's just you can't be beat. I mean it literally can't be beat.
Speaker 2Yeah, that's cool man.
Speaker 1And the other thing is the speed. So as soon as you sign the Greenlight Docs, which is basically just like hey, you agree to the services that we're going to provide we will have you raising capital in five business days.
Speaker 2No way, man. That's really cool.
Speaker 1That's fantastic If you come to me. If you come to me as a security attorney, I've got that hat on. You know we're not doing it. In five days I'll tell you that.
Speaker 2Now, how much education do you help with? Because I tell people all the time like, here's the questions you should have beforehand, because your SEC, like your attorney, will be the most expensive education you have ever paid for if you don't have that information beforehand. So, like, what? What type of? Because they'll charge you. Like, if you don't know if you want a 506b or 506c, you don't know how, if you, if you want your waterfall this way, if you want this and you're just asking questions, they're going to charge you by the hour to ask those questions. And so for you. Like, how much help do you guys help for people who are like I've never started a fund. I'm really looking forward to starting this, but I don't know where to go. What does that look?
Speaker 1Yeah, I mean for TribeVest. We're putting together some modules actually right now. We're going to roll them out literally before the end of the year, which will be fantastic because we're going to share that with the world.
Speaker 1You're going to be able to self-educate on what is a fund to fund, how does that look like in the fundraising ecosystem, what is a preferred return? What is the profits? What kind of fees can you charge All kind of the nuts and bolts that you need to know. We're going to have that out there so soon enough. That'll be available to the public and that'll be a huge value add and huge help for us as well, because we don't have to educate one-on-one anymore.
Speaker 1As a securities attorney, I will advise on people. I mean, I'm happy I'm more of a mentor and a coach when it comes to that sort of stuff and I'll be like, look, attorney, hat off. Right now I'm going to tell you this and here's kind of your gray area and that sort of thing. So you know, I think I get into those sorts of things a little bit more than most attorneys will. But if you go to like a large law firm or even a regional law firm, they're going to charge you per hour and that's going to be anywhere between, you know, $400 to $1,500 an hour.
Speaker 2Yeah, there's no doubt. Yeah, there's no doubt, there's no doubt. So this is really interesting because one of the questions that I had, just going into this and not even knowing about the, not even knowing about Trivest and and all of that is what have you seen as far as like trends, that you're a disruptor of industries and we're trying to disrupt this huge investment fund industry, but it seems like there's different type of offerings, there are different structures, there's different things that people are doing. What are some of the trends that you're seeing that people are kind of pressing against or starting in as far as funds as a whole? You're seeing that be the case of being more common.
Speaker 1Yeah, I mean so like biggest picture right is trying to get these types of alternative investments to the masses. Because most wealthy people, even rich people, whatever you want to call them that have some expendable income that want to invest. The only thing they know are 401ks and stock market, mutual funds and those sorts of things and we just need to get that out there. And I think you're seeing a trend towards that. I think bringing in more people that want to raise capital and start a capital raising business is how you do it right, because they've already got their built-in networks and then those networks know other people and it kind of spider webs out from there. So that's kind of the biggest picture trend is just trying to see. Well, we're seeing alternative investments just become more available to the masses.
Speaker 1Second, you're seeing the industry go away from the co-GP model, which I like to say the co-GP model is dead, and you're seeing people turn to the fund to fund route because the co-GP model has just been abused. If you do it the right way, if you're actually an active partner and you're actually participating in the meetings and deciding on asset management type decisions, then all good. That's how it's supposed to be. But when you're just raising capital and not doing anything else. That's when the co-GP model gets abused, and it's not just oh well, you shouldn't do that. It's illegal, it's plain and simple, illegal.
Speaker 2So that was like the conversation I'm telling you, when I was having the conversation with that guy at my mastermind and he was like we're doing this and I go like stop. And he's like ha ha ha. And I go, no, no, it's illegal. And he's like oh ha ha. And I'm like no, no, like prison illegal. And I feel like just people don't understand the severity because they feel like it was what's wrong with it, it's not that bad. And it's like no, no, it's illegal.
Speaker 1Yeah, and you know, this is just what happens, right, like you, just kind of, everybody just pushes boundaries, pushes boundaries and you know, fortunately or unfortunately, however you want to look at it the industry's been fantastic for a long time. Right, the real estate industries went up since the crash in 2009, 2008,. All the way until really COVID, and that was just a blip, and then it took off again and then basically up until last year 2023 is when you started seeing it kind of take a nosedive a little bit because of interest rates, and not because of the actual state of the market, but the interest rates, but either way, it started going down. You started seeing some people get in trouble, but all along the way on that rise up, all the investors have been happy. He's suing anybody because they've been getting their returns and everybody's been crushing it. And even if you're a terrible operator, you've still been crushing it because the market saved you and nobody operator. You've still been crushing it because the market saved you and nobody's getting sued.
Speaker 2So it's all good until it's not.
Speaker 1And then you've seen in yeah, and then you see in 2023, you see, you know potential foreclosures and workouts and you know capital calls things like that.
Speaker 1Investors aren't happy. And we're in America and people are like, yo, how can I get my money back? Well, you try to sue somebody and that's when you start seeing some of these things where the co-GP model was abused or people weren't raising capital the right way or they didn't file their exemptions all those sorts of legal things that nobody really worried about because everything was great start coming up and you're seeing that now. So you're seeing that shift away from the co-GP model to the fund to funds model, because the fund to funds model is compliant, obviously, if you do it the right way. But it's more compliant and it's always been the answer. But at the end of the day, it's expensive, it's more complicated, you've got more attorneys, you've got a whole separate offering, all these different things that you have to take in account and people are like I'm not doing that, but now we're kind of forced into having to do that. And that's where you know, try best and a Vester and some other folks are coming in and having coming up with solutions for that.
Speaker 2Yeah, that's really cool Cause one. One more thing I'm really curious on that, you've seen, because I feel like there is a fairly irregular you regulated asset in a coming into a very regulated, like structure, Right? So one of the things I'm talking about is like the rise of crypto in these crypto funds and these blockchains-based funds. Have you seen that start to affect like the legal landscape of funds and the formation that people have of that and the way that people are thinking through that and even how the SEC is starting to figure that out and stuff like that? Have you seen like an emergence of more of those blockchain-based funds?
Speaker 1I have, yeah, and not just like strictly, you know, blockchain and crypto, but also just spinoffs of that right. Like you saw, tokenized real estate was a big thing for a little while. It's kind of turned down a little bit, but that was huge.
Speaker 2That was like that was crazy that you could be like I'm tokenizing my bathroom and when I sell it you get like that much of the square footage and the appreciation. It's like what.
Speaker 1That's crazy, yeah. So it's kind of cooled out a little bit. You know, I don't I honestly don't follow that that closely, just because I know that it just changes so fast and, especially now that we've got the new administration in here, you're probably going to see a lot more loosening of that, which would be good for us. But yeah, I mean you know you're going to see that right. I mean you know you're going to see that right, like cause, we're just on the precipice of just crazy technological advancements, from tokenized real estate to, you know, crypto to AI, like all this stuff is going to like this landscape five years from now is is going to be unrecognizable.
Speaker 2Yeah, that's it's it really will, just because of the way that contract law is going to go from, I guess, blockchain-based, because you'll see that where the blockchain will take a lot of that aspect and change it and flip it on its head. So it's going to be super interesting to see how that goes. Man, I want to respect and honor your time. I appreciate you being on. I guess one thing, I guess one more question that I have before we kind of go into the exit, if there's somebody that's thinking about starting a fund, because what you were saying earlier, really there's only two main people. If I'm fully transparent, I want to be able to be the voice of funds for minorities and women in this country, because all the white dudes they can have all the other white dudes, that's fine with me, but there's a huge disparity.
Speaker 2I heard Don Peebles once say and this has changed my thought, my process, like my mindset ever since he says in the history of America there has been $94 trillion to come in through private equity and real estate. In the history of America, 8.3% of that no, sorry, 1.7% of that have gone to minorities and women. That means 98.3% of that has gone to white men. And so there's this massive disparity between access to education, like you're saying, access to capital, access to I think there's this quote that says the world equally distributes talent but doesn't equally distribute opportunity. And so there's this huge disparity of opportunity of people that look like me and look like you and look like women around this country that I would love to make sure we're the voice for.
Speaker 2And so, for people who don't have a lot of that education one, what's a big piece of advice that you would give them? And when they're starting to think about starting a fund, because I think like, if I'm full transparency, most of the people I talk to and I told you I saved from prison they're black dudes, they're just trying to do the right thing but don't have the education to do the right thing. And so for that, like, what's a big piece of advice you would give people that are thinking like I think I want to start a fund, what should I look out for? How expensive doesn't matter, because we've talked about a better solution for how expensive it can be, but what's the thing that they should be looking out for?
Speaker 1Yeah, I mean you know right off the bat, like be confident and don't be intimidated, because I think some people in those groups that you described might feel a little discouraged because of that. Because you walk into a room that is maybe all fund managers or all capital raisers or you know those types of people, and you're like well, I don't look like everybody else, so maybe I don't belong here, or maybe your confidence goes from here to here and you're like and then, and then you come off that way, right, like you've got to.
Speaker 1You got to step into that room with confidence and a lot of a lot of that comes down to self-education, right, like it comes from education and it's out there now. I mean we mentioned that there's only a few really good sources, but you can still piece it together I mean you can find anything on YouTube University just to at least get the, you know, being able to talk, the talk and walk the walk and feel confident doing that. So just get educated to start, get that baseline and then get out there and just be confident. Like I said, don't be intimidated, don't feel like you don't belong because we've got to get folks out there that are doing it from those groups. Yep, that's right man.
Speaker 2Well, I appreciate it, seth. Where can people find you? Where can people hire you? Where can people join what you're doing? Because I think that they should. I'm a big believer in you and what you're doing and I'm excited for all those things.
Speaker 1Appreciate it, man. I usually update all my links at sethpaulbradleycom, so you can find everything there. I'm all over social media, so all so you can find everything there. I'm all over social media, so all my handles are Seth Bradley, esq.
Speaker 2Cool man. I appreciate you, Thankful for your time, thankful for your friendship. I really look forward to growing together. Man, it's fun to see other people that, like we're about the same age. I don't know, you look like you're in your twenties, but you're not, I know that like for us to just rise together on this man, and so I'm thankful for this journey that we're on together, and I appreciate you being here today.
Speaker 1Love it brother.
Speaker 2Appreciate you. Yes, sir, talk to you later. Man. Wow, I hope you enjoyed that. I have a quick favor. If you've been enjoying the show, there's one simple way you can support us, and it's by hitting that follow button or that subscribe button on the app you're listening to. I want to level this podcast up in every single way possible, bringing you more value, incredible content and guests and new strategies. Following the show and leaving a quick review goes a really long way in helping us to grow and continue to deliver top tier content. It's the only free thing I'll ever ask you to do and it makes a bigger impact than I can possibly put into words. So thank you for being a part of this journey and I'll definitely catch you on the next episode, to great success and greater impact. Peace.