How To Start A SAAS

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                                          Securities Laws, Regulation D, and the Offering Memorandum
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                                         Please be aware that any corporation considering the status quo of a funding real estate fund must retain a skilled prison advisor and a monetary group to advise on capital raising, fund setup, and management.
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                                            Securities Act 1933 Regulation D
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                                         A private equity investment fund can be formed without registration with the Securities and Exchange Commission (SEC) as long as it meets the requirements of Rule D of the Securities Act of 1933. These requirements were amended by the 2012 JOBS Act, which relaxed some of the regulations to facilitate SME financing. In 2016, the changes were further refined by changing the rules for registration exceptions.
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                                         Specifically, Regulation D provides two exceptions to the requirements of the Securities Act, Rules 504 and 506. We also identify two basic investor types.
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                                         Accredited and Non-Accredited Investors: Accredited investors or qualified investors are those whose personal net worth, excluding the value of their home, exceeds $1 million or whose annual income has exceeded $200,000 over the past two years and who plan to maintain that same income this year. An investor will not be certified if any of these criteria are not met. All directors, general partners, officers, sponsors, and corporations are considered accredited investors, regardless of their net worth or income.
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                                          What is Rule 504?
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                                          Rule 504 allows the sponsor to raise $5 million annually without filing with the SEC. Funding may come from accredited or non-accredited investors, and sponsors are not required to provide specific disclosures. In addition, this offer is "restricted." This means that shares granted to an LP cannot be sold without prior registration. Under Rule 504, sponsors may not solicit or encourage the provision of benefits to the public unless certain requirements are met.
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                                           What is Rule 506?
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                                          The SEC's Rule 506 allows sponsors to raise unlimited capital provided they comply with a specific set of rules within Rule 506(b) and Rule 506(c). This rule allows sponsors to offer funds to up to 35 non-accredited investors and an unlimited number of accredited investors. All non-accredited advisors should seek advice from an investment advisor or be an experienced investor. Rule 506 also requires sponsors to be able to answer questions from potential buyers. Additionally, the rules prohibit investors from being solicited or promoting offerings unless all investors in the fund are accredited and the sponsor confirms that each investor meets the required standards for accreditation. Also, an investor is prohibited from selling his holdings for at least one year.
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                                           About Recruitment Materials and Private Placement Memorandum
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                                         An Offering Document or Private Placement Memorandum (PPM) may be mandatory, but Sponsors should consider this as a means of positive communication with potential investors. These documents also help protect the Sponsor from unforeseen liability. Offering documents can be as simple as a term sheet if only a few accredited investors are involved and investors are trusted to conduct their due diligence on the offering. However, for a larger group of potential investors, a formal PPM provides the most consistent description of your offering while communicating strategy, risks, and opportunities.
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                                            Fund Management
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                                         Initial sponsors need to be aware of certain factors related to funding management with outside investors. Closed-end funds make investing in real estate funds easier, especially when raising money for a specific investment or series of investments with a fixed number of partners. Using such a structure eliminates the need to frequently evaluate the fund for add-on investors. Generally, each partner will provide additional funding following the initial contribution, as specified in the development plan. Most sponsors plan per- scheduled equity funding “calls” detailing the amounts, dates, and terms of each funding round.
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                                            Finance Costs
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                                          Part of the funding process is deciding how the fund and manager will cover the costs. In general, the Fund will only bear costs associated with its establishment and operation, including legal, accounting, and administrative costs, regulatory filings, liquidation costs, and brokerage fees. Fund sponsors receive compensation, including running interest and other fees, depending on the sponsor's level of involvement in day-to-day operations. The simplest fees are for managing investments, which usually range from 0.5% to 2%. Other fees are called "sponsor fees" and include Property Management Fees, finance fees, and administrative fees.
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                                            Capital Commitment
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                                          By applying for an investment in a private equity real estate fund, an investor typically commits to investing a certain amount of capital from the sponsor within a specified period (the "capital call"). Once an investor has deposited capital, it will only be returned on a "corporate event," such as the sale or refinancing of assets within the fund or events resulting from positive cash flow within the fund.
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                                           Priority Return
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                                         As mentioned above, most real estate investment funds contain favorable rates of return for investors, ranging from 6% to 12% of invested capital. Such earnings are accrued and compounded on an annual basis and distributed by the rules for the distribution of corporate events.
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                                           Distribution Waterfall
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                                         As mentioned above, most real estate investment funds contain favorable rates of return for investors, ranging from 6% to 12% of invested capital. Such earnings are accrued and compounded on an annual basis and distributed by the rules for the distribution of corporate events.
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                                         <b>Phase 1:</b> Favorable Returns and Recycling: Investors receive distributions first until capital contributions and senior yields are paid in full
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                                         <b>Phase 2:</b> A catch-up where the remaining funds are split between the investor and the sponsor in the form of carried interest. However, at this stage, sponsors typically continue to receive awards at the catch-up rate until accrued interest awards catch up.
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                                         <b>Phase 3:</b> With carried interest starting immediately after the catch-up phase, capital allocation is distributed based on carried interest. Sponsors usually get 20% for them and 80% for investors.
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                                         Complementary Clawback
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                                         Limited partners often receive less than their promised allotment after the fund gets dissolved. This happens when the fund performs better in the early game than in the late game. In this case, the investor "recovers" the unpaid amount from the effective interest paid to the sponsor. Fund sponsors must be prepared for this and must maintain sufficient reserves, usually in trusts, to meet these financial requirements. Clawbacks are found in funds that hold multiple investments and provide a solution for investors who are not receiving a favorable overall return on their capital investment or a favorable rate of return.
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                                         All in all, private equity real estate funds allow sponsors to raise capital at scale within pooled funds, eliminating the need to raise capital on a transaction-by-deal basis. It also avoids the complexities and extensive regulations associated with REIT formations. Starting a real estate fund is a big step for even the most seasoned real estate and investment professionals
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How To Start A SAAS

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Chapter-6

Chapter-7

Chapter-8

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Dan Lesniak

Cody Davis

Samuel Zell