Can I raise capital with no track record?
Yes, but the credibility has to come from somewhere honest: an experienced partner, a real role on a team, visible preparation and small first steps, never from blurring what you have done.
Key points
- Investors want to know whether you can run the asset and whether you can look after their money.
- An experienced co-sponsor lends credibility, as long as you describe the record as theirs.
- Showing your preparation, such as deals underwritten and properties toured, says more than a polished bio.
- A small first deal gives you a record you can point to next time.
- Never present someone else's record, or a passive investment, as your own operating experience.
Alejandro Davila, founder of Mownt, Updated
What investors are really asking
When someone asks about your track record, they are usually asking two things. Have you bought, run and sold properties like this one? And have you looked after other people's money before: reporting to them, paying distributions and giving their capital back?
Without either, you can still be credible. The credibility simply comes from other places: the people you work with, the preparation you can show and the small things you have already finished.
Borrow experience honestly
The most common route is to partner with someone who has done it. That might be a co-sponsor who has taken properties from purchase to sale, or a key principal whose balance sheet and history satisfy the lender.
Describe it precisely. Say that your partner has run properties of this size, and explain your own job on the deal. If an investor asks you directly about your experience, answer directly. Dodging the question costs more trust than the honest answer does.
Each person's role and pay should be real and written down. Pay that rises with the amount someone raises generally requires that person to be a registered broker-dealer, so have your attorney structure the economics around the role.
Show your preparation
Investors notice effort. Keep a running log of what you have done to get ready: properties underwritten and toured, offers made, lenders and managers met, and deals you passed on with the reason why. A count like that, stated plainly, persuades more than an adjective.
Share what you are learning. Short, honest notes about how this kind of investing works, what you looked at and why you walked away show your judgment over time, and they give people a reason to stay in touch before there is any deal. Keep them general: under 506(b) they should never point to a specific offering.
Get ready on paper too: a short document that explains who you are, what you buy and how you treat investors, kept separate from any offering's documents and consistent with them.
Start small and build up
Some first-time sponsors invest passively in another sponsor's deal first, to see how a good operator communicates and handles money. Others buy something small with their own capital or one partner. Others take a real job on an experienced sponsor's team.
Each of these gives you something true to say next time. Each small deal is evidence for a bigger one, and a few finished deals tend to make the next raise easier.
Be careful with the labels. A passive investment is not operating experience, and a team's combined history is not yours alone. Say exactly what you did, because overstating your record to an investor is a misstatement, not just a bad look.
How Mownt helps with this
- Mownt records your investor list when you import it. You decide how its columns map to your fields.
- Mownt sends the email sequences you set up when you tag a contact. You decide the steps and the delay before each one.
- Mownt includes the Capital Raiser Playbook in your account. You decide how to use it for your raise.
Written by Alejandro Davila, founder of Mownt. Mownt sells the software described here.
The full checklist is inside Mownt. Read "Your first raise without a track record" in the Capital Raiser Playbook when you join. Apply for early access
Frequently asked questions
Should I tell investors this is my first deal?
Lead with your strengths and your team's, and answer honestly when asked. Do not hide it, and you do not need to open with it.
Does investing passively in other deals count as experience?
It counts as experience as an investor, which is useful. It is not experience running a property, so describe it as what it is.
Can my co-sponsor's record appear in my materials?
Yes, with their consent, clearly labelled as theirs, and consistent with the offering documents.
How big should my first deal be?
Small enough that you and your partners can raise it with confidence. A smaller first deal also gives you a record sooner.
Keep reading
Getting past friends and family
What do I do after friends and family?
Keep going through three routes: deepen your wider network under 506(b), promote openly under 506(c), or meet people in person, knowing that each route carries its own rules.
Updated
Getting past friends and family
How do I raise money for my first real estate deal?
Build relationships and a team before you need the money, open an offering only once a real deal is under contract, and size that deal to what you and your partners can confidently raise.
Updated