Real estate development is a competitive field with a lot of opportunity for innovators, but there’s one fundamental challenge in any competitive field, which is finding reliable information for newcomers. Established talent tends to be selective about cultivating possible competitors, so it’s not surprising that many of the people you could learn the most from are in your pool of prospective investors. That’s why your first few investors can be your best resources on a project, if you choose them wisely. The tech and real estate investment markets don’t have a lot in common, but one trait they share is the tradition of cultivating talent alongside new ventures by stepping into available leadership positions on projects that need major investor involvement.
For developers looking to establish the kind of working capital that supports broad portfolio growth, these relationships are essential. They’re how you learn the solutions to practical problems as your project moves forward. The key to cultivating fruitful relationships is relatively simple in principle, too. It’s the same one you follow when recruiting talent as an employer. You want someone whose interests and goals in the industry align with yours as specifically as possible.
Innovation Means Identifying Opportunity
Your most successful bids for funding will be the ones that you connect with on an innate level, through shared interests or goals for the investment. Innovation thrives in environments where individuals share these goals and push one another to do better, challenging their processes for efficiency and leading by example when new ways are identified. That means the more direct experience your prospective investor has with projects like yours, the more likely they are to catch interest in the proposal.
Let’s do a thought project to help you see how this kind of planning works in practice. You’ve got an idea for a new resort. You could start by looking at investors who specialize in hospitality. It’s a good, basic starting place, and it’s likely to get you people who take resort proposals seriously. The only sticky widget in the situation is that there’s a lot of diversity in hospitality, so you’re not necessarily going to pull interest from most of the investors you could target with such a broad approach. The pool needs narrowing.
Researching Investors and Capital Firms in Detail
Narrowing your search until you find a pool of possible investors that is approachably small but diverse enough to give you a few solid chances of landing a pitch is the next step. This kind of research is kind of like peeling an onion, you’ve got to plan on making passes that get tighter and tighter until you have a useful core, with the extra names peeled away. Start by questioning yourself. What kind of resort are you looking at? What are the primary attractions you plan to include? What are the nearby tourist attractions you can use to set a tone for your target demographic?
Let’s say you’re looking into something that appeals to active, young travelers with the money to put into intense and adventurous outdoor sports. You’ve sketched out an idea for a resort in Northern Michigan that combines the area’s best seasonal outdoor sports. You’re ready for skiing, mountain bikes, kayaks, survival camping enthusiasts, even cold water divers. Now you need to figure out who invests in sports resorts like this, as well as who is likely to view the location and specific niche as a new opportunity.
Exciting Your Prospects When It’s Time To Pitch
This is also where you can get a little more conceptual. Remember, your goal is to raise interest, so appealing to a philosophical goal with something new and promising might get you to a deal faster than a pitch that repeats the same general theme as an investor’s last few projects. Instead of looking as just investors with experience developing resorts that offer attractions like sports, look for ones who combine their philosophical or philanthropic goals with their market analysis. Appeal to that need or that person’s goals while demonstrating the value of the investment and you’re likely to land the deal.
For example, Will Obeid makes a point of bringing together the potential revenue of the booming fitness industry and the appeal of hospitality properties that offer a range of on-site and nearby activities. His past investments include resorts dedicated to hiking, mountain climbing, and other activities that individuals engaged in the fitness lifestyle would seek out. A new prospect that develops the theme of his firm’s niche further with a unique design in a striking location is likely to engage investors like him, because his niche is just as much about encouraging a health and wellness mindset as it is approaching a strong market synergy.
Use this process to figure out your own best fit approaches as you develop pitches. You’ll figure out how to get the attention of the right kind of investor, and that’s half the battle.