To achieve a $5 million raise for individual properties under Regulation Crowdfunding (Reg CF), you need to transition from “finding a house” to “building a compliant financial product.”
Here is the step-by-step operational plan to launch and fund your properties.
Phase 1: Legal & Financial Foundation (Months 1–2)
Before you can ask for a single dollar, you must have your “legal armor” in place.
- Form the Entity: Create a specific LLC for each property (often called an SPV or Special Purpose Vehicle). Gonen Corp will likely act as the “Manager” of these LLCs.
- Audit the Books: For a $5M raise, the SEC requires audited financial statements from the past two years (or since inception).
- Note: If this is a brand-new startup, you still need an initial audit showing your current “opening” balance sheet.
- Draft the Disclosure (Form C): This is your “Public PPM.” It must include:
- How the $5M will be spent (Purchase price, renovations, reserves).
- The “Waterfall” (Who gets paid first).
- Risk factors (Market changes, construction delays).
Phase 2: Platform Selection & Integration (Month 3)
Under Reg CF, you must use an SEC-registered intermediary. You cannot just raise the money on your own website without one.
- Choose a Portal: Select a platform like Wefunder, StartEngine, or Republic. They handle the “Know Your Customer” (KYC) laws and the escrow of funds.
- Onboarding: The platform will perform due diligence on Gonen Corp’s founders to ensure there is no history of fraud.
- Set the Terms: Define your “Minimum Funding Goal” (e.g., $500k to close the first property) and your “Maximum” ($5M).
Phase 3: The “Quiet Period” & Marketing Prep (Month 4)
The SEC has strict rules about how you “shout” about your deal.
- Draft the “Tombstone” Ad: You can only advertise the basic facts (The name of Gonen Corp, the amount being raised, and the link to the platform).
- Warm the Leads: Reach out to your existing network. SEC rules allow you to “Test the Waters” to see if people are interested before the filing is officially live.
- Creative Assets: Film your “Dialogue Script” videos and build the landing page that focuses on the tangible nature of the asset (“Touch the brick”).
Phase 4: The Launch & The Raise (Months 5–10)
Once Form C is filed, the campaign goes live.
- The 48-Hour Rule: Investors can cancel their commitment up to 48 hours before the deadline. You must keep them engaged so they don’t “drop out.”
- Rolling Closes: As you hit certain milestones (e.g., every $1M raised), you can “withdraw” the money from escrow to actually purchase and close on the individual properties. This allows you to start generating rent for investors while the raise is still active.
- Investor Communication: Use the platform’s “Update” feature to show photos of the properties being renovated. This reinforces the “I own that” feeling.
Phase 5: Operations & Repayment (Ongoing)
The work begins once the money is raised.
- Property Management: Gonen Corp manages the tenants, repairs, and taxes.
- Distribution: Use an automated system (often provided by the portal) to send out quarterly dividends from the rental income.
- Annual Reporting: You must file Form C-AR every year with the SEC to update your investors on the fund’s financial health.
Crowdfunding Workflow Diagram
The “Gonen” Checklist for Success
- [ ] The “Anchor” Property: Have at least one property under contract or “Letter of Intent” (LOI) to show investors exactly what their money is buying first.
- [ ] Marketing Budget: Expect to spend 5%–10% of your target ($250k–$500k) on ads and legal to successfully raise $5M. Crowdfunding is rarely “free” or “organic.”
- [ ] Escrow Threshold: Set a realistic “minimum” (e.g., $100,000). If you don’t hit this minimum, all money must be returned to investors.
Would you like me to help you draft the “Use of Proceeds” section for your Form C, detailing exactly how a $5M raise would be split between purchase price, renovations, and fees?