Crowdfunding vs Syndication with Gene Trowbridge

In this podcast episode, Dave Debeau, the host, engages in an insightful discussion with Gene Trowbridge regarding two major forms of investment strategies — Crowdfunding and Syndication. Both forms of investment draw their benefits and have their respective drawbacks. The objective of this discussion is to help listeners establish a clear understanding of these concepts, thereby making informed decisions regarding their investment strategies. 

Crowdfunding Vs Syndication With Gene Trowbridge

In this podcast episode, Dave Debeau, the host, engages in an insightful discussion with Gene Trowbridge regarding two major forms of investment strategies — Crowdfunding and Syndication. Both forms of investment draw their benefits and have their respective drawbacks. The objective of this discussion is to help listeners establish a clear understanding of these concepts, thereby making informed decisions regarding their investment strategies. 

Without further ado, let’s delve into the intriguing world of Crowdfunding and Syndication with our esteemed guest, Gene Trowbridge.

But first, if you want financing for your next investment and want to know what type of collateral may be involved, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.

Defining Crowdfunding: A Simple Explanation

Crowdfunding, as Dave Debeau and guest Gene Trowbridge discuss, is an innovative and modern method of raising capital. It is a process where a large group of individuals come together, mainly through online platforms, to contribute small amounts of money towards a specific project, idea, or cause. You, as an investor, have the opportunity to contribute to projects that you believe in and receive rewards or equity in return. 

Whether you’re looking to support a start-up business, a social cause, or a creative idea, crowdfunding gives you a means to directly impact the success of these endeavours. It democratizes the investment process and makes it accessible to anyone, regardless of their wealth or investment knowledge.

Breaking DownSyndications: What You Need to Know

Gene Trowbridge, an expert in the field, succinctly explains syndication as a financial structure where a group of investors come together to pool their resources. This collaborative approach is utilized to invest in properties or other assets that would be out of their individual financial reach. These shared investments are guided and managed by a lead investor or syndicated. 

Here’s a closer look at the two core elements that make up a syndication. First, there’s the ‘syndicated’. This is an individual or firm that establishes, organizes, and manages the syndicate. The responsibility of a syndicated includes identifying potential investments, structuring the deal, and overseeing the ongoing management of the asset. 

Second, there are ‘investors’. These are people who contribute money and resources to the syndicate but don’t engage in the management of the asset. Instead, they trust the expertise and judgment of the syndicated to generate a favourable return on their investment. 

While the concept may seem complex, Trowbridge further simplifies it by comparing a syndication to a ship. The syndicator is the captain, steering the vessel, while the investors are passengers enjoying the journey. To be part of this ocean voyage, all they need to do is buy a ticket and get onboard.

Comparing Crowdfunding to Syndications: The Key Differences

In conversation with Dave Debeau, Gene Trowbridge points out several critical differences between crowdfunding and syndications. One of the main distinctions lie in how the investments are structured. In crowdfunding, a large number of people each contribute a relatively small amount, with the cumulative total serving to finance a specific project or venture. On the contrary, syndications typically involve fewer investors, each putting in a substantial sum, allowing them to have more say on how the investment is managed. 

This leads to another significant difference: investor involvement. In traditional crowdfunding models, investors have little to no input on day-to-day operations of the funded project, relying on the discretion of the project leaders. However, syndications often allow for a more hands-on approach, with investors playing a more active role in decision-making. 

Regarding return on investment, Trowbridge notes that both models offer potential profits. However, the degree of this varies. Crowdfunding investors typically anticipate smaller returns spread across many projects, while syndicate investors expect a more sizeable return, albeit from fewer investments. 

Understanding the intricacies between the two investment options allows you to make more informed decisions and ultimately, choose the model that aligns with your investment goals.

The Perks: Advantages of Investing in Crowdfunding

Dave Debeau, leading the discussion, shed light on the advantages of investing in crowdfunding with input from an experienced syndicated, Gene Trowbridge. One of the key points made was the accessibility that crowdfunding offers. Unlike syndication, which typically requires “significant capital investment, crowdfunding platforms allow a broader audience to take part. “Crowdfunding is open to anyone and everyone,” said Dave, reflecting the views of his guest. 

Another significant benefit of crowdfunding Gene highlighted is the diversity it affords. With crowdfunding, you have the possibility of investing in a myriad of projects, spreading the risk and enabling freedom of choice. It’s a fascinating concept that allows entrepreneurs and project creators to fulfill their ambitions while offering investors a piece of the action.” 

Furthermore, crowdfunding allows for swift investment decisions without substantial red tape and bureaucracy. “With crowdfunding, things move quickly”, Gene pointed out, referring to the relative speed at which fundraising rounds can close. 

Finally, crowdfunding can also provide an emotional and personal return on investments. For many investors, it is not just about the financial return but also knowing that they’ve supported an idea or a project, that they find worthwhile. This double bottom-line effect creates excitement and personal engagement and adds an additional layer of reward.

Deciding What’s Best: Crowdfunding or Syndications?

In determining the better investment strategy, whether crowdfunding or syndications, Dave Debeau sought the expertise of seasoned syndications trader, Gene Trowbridge. Gene emphasized that the choice between the two largely depends on the investor’s individual circumstances, preferences, and investment goals. 

They explored key factors that could influence the decision. Liquidity needs, tolerance for risk, the level of control desired, and the desired level of involvement in the investment could all play pivotal roles. Gene added that investors should also consider their financial goals and where they envision themselves in the future. 

For those looking for lower entry costs and a lesser degree of involvement, crowdfunding could be an attractive option. Conversely, investors seeking greater control over their investments and the potential for substantial returns might find syndications appealing.

The central point of their conversation was that successful investing does not follow a one-size-fits-all approach. Hence, potential investors should conduct extensive research, perhaps seek professional advice, before determining their preferred route – crowdfunding or syndications.

Detailed Steps: How to Participate in Syndications

Entering the world of syndications, according to Gene Trowbridge, requires certain steps. His advice acts as a roadmap for those embarking on this journey. 

Firstly, consider younger and smaller syndications. They often present opportunities for larger returns, despite posing more risk. This requires investors to consider their own risk appetite. 

Secondly, Trowbridge underscores the importance of understanding the legalities. As with any investment, prospective participators should read agreements meticulously. Legalities differ from syndication to syndication, so understanding contract specifics is vital. 

Finally, Trowbridge encourages investment diversification. Spreading one’s investment across different syndications can minimise risk and maximise returns. Consider each option on its individual merit, but also in relation to your overall investment portfolio. 

Debeau endorsed Trowbridge’s advice, adding that personal research and due diligence could never be overstated. Always do your homework before diving into an investment.

Closing Thoughts: Dave Debeau Reflects on the Conversation with Gene Trowbridge

In his closing thoughts, Dave Debeau reflects on the enlightening conversation he had with Gene Trowbridge. He identifies Trowbridge’s insights regarding the differences between crowdfunding and syndications as a valuable asset for the show’s listeners considering the two investment paths. 

A key takeaway for Debeau from the episode is Trowbridge’s ease in explaining complex concepts in a simplified, easy-to-understand manner. This makes the intricate world of real estate crowdfunding and syndications more accessible for beginners. With Trowbridge’s insights, he notes, listeners have been endowed with the knowledge needed to make informed investment decisions. 

Debeau appreciates Trowbridge’s systematic approach in distinguishing crowdfunding from syndications. He highlights the relevance of structure, organization, and regulatory compliance in an investment practice that can easily become complex for the uninitiated. 

Finally, Debeau commends Trowbridge’s dedication to educating novices and experts alike, maintaining that accessible education is key to breaking barriers and optimizing investment outcomes. He concludes the episode by expressing enthusiasm for future discussions that would provide further education and insights to listeners.

If you are ready to start investing today and want more information about how your mortgage may be secured – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.

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