Raising Capital through RIA/IBD

Time is money.  When raising capital, the faster you are able to acquire the capital needed to fund your alternative investment opportunity, the better. An ever increasing number of Investment Sponsors are realizing that positioning their private offerings towards Registered Investment Advisory (RIAs) firms and/or Independent Broker Dealers (IBDs) can significantly expedite the velocity by which capital can be raised for their ventures.

The RIA/IBD Channel Process

Step 1:  Obtain a Due Diligence Report

Registered Investment Advisors (RIAs) and Registered Financial Representatives are not going to feel comfortable about directing their client’s savings into your alternative asset unless you can demonstrate that the appropriate level of due diligence has been performed on your investment fund by a neutral third party due diligence firm.  A due diligence report from a credible source can cost anywhere from $10,000-25,000.  Many Broker Dealers and RIA firms also charge their own fees to perform internal due diligence on your private offering prior to executing a selling agreement.

Step 2:  Obtain Various Selling Agreements

Selling agreements are the documents which illustrate the terms by which an advisory firm is willing to sell your private offering.  Without a mutually executed selling agreement, no capital will typically be raised by a financial advisor.  Each Independent Broker Dealer and/or RIA will have their own specific commission and fee structure which will be negotiated by each party.  Investment Sponsors usually have one or various professionals on their team whose sole responsibility is to establish selling agreements with various financial institutions.  This can be done by attending alternative investment industry conferences or through direct sales methods.

Step 3:  Develop Alternative Asset IRA Custody Solution

Traditional brokerage custodians are not interested in holding illiquid non-registered private offerings within retirement accounts.  Therefore, it is critical that your company establish a relationship with an IRA company that specializes in providing alternative investment custodial services and has created a service model uniquely built to serve the advisory industry.

Contact us today and learn how we can help you maximize the RIA/IBD distribution channel to meet your capital raising goals as quickly as possible.