First of all, when it comes to Capital
Raising for any type of Fund there are certain risks that both parties have to
share! There is Legal Risks involved, there is Expense Risks, there is Lost
Revenue Risks, and both parties have to have "Skin in the Game" and
share those risks equally. The way Fund Managers share that risk is to pay a
Retainer for their Capital Raise and then they have a vested interest in the
success of the Capital Raise! Our firm has designed a “Refund Contract” where
the Fund Managers pays a Retainer on a monthly basis for the Capital Raise plus,
REO Capital charges a 2% Success Fee and then at the completion of the Capital
Raise REO Capital, Refunds the entire Retainer Fee of some $600,000 back to the
Fund Manager. This shows us the Fund Manager is serious about a Capital Raise! Otherwise
the Fund Manager & General Partners are getting the Capital Raise for FREE!
The average Capital Raise of $100 Million takes about 24 months to complete.
There is no way my firm will cover all the risks & expenses myself during
that 24 month period alone! I have expenses of rent, automotive, & employee
salaries etc… just like every other firm and will not go 24 months without
paying on my expenses!
However, keep in mind that my firm’s
fees are about 70% less than a Third Party Marketing firm that charges a
Success Fee and 40% less than other firms that charge a Retainer. There are no
other Retained firms out there that will “Refund” all your Retainer Fees so
that the Capital Raise is based on a Success Fee! Also our firm re-invests part
of our Success Fee back into the funds we Raise Capital for so that we have a
vested interest in the fund & “skin in the game”. Finally, we do not lock our clients into a 24
month Contract, we have a Non- Performance Clause in our Contract, there is no 24
month lock up requirement on our Contract. Our Non Performance Clause after the first six months has
a 30 day advance written notice of non- performance to terminate the contract! 24 months is approximately $500,000 and
we only charge a 1tal
Our average Retainer for the 24 month Capital Raise is approximately $600,000
and we “Refund” the entire Retainer Fee at the completion of the capital raise,
so that the Capital Raise is based on Success! We also charge a 2% Success Fee,
compared to some TPM firms that charge anywhere from 2-10% Success Fee for our
Total Fee of about $2.6 Million versus the $5.9 Million with most Third Party
Marketers. Which would you rather pay the $5.9 Million in Total Success Fees or
$2.6 Million for the Retainer & Success Fees of a Capital Introduction Firm
– REO Capital??? The answer is simple – REO Capital is the Clear Choice!
John Denes
CEO
REO Capital, LLC
johndenes@reocapitalllc.com
www.reocapitalllc.com
T: 248-313-9966
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