I get asked this question a lot,
“Bridger, is it even possible for me to raise money outside of the United States?”
The simple answer is yes, but you have to remember this one thing or it might get you into trouble.
HIGH Expenses could cause issues
I typically get this question from people who fall into one of two categories:
- They have a friend or family member that lives outside of the U.S. and wants to invest in their fund.
- They themselves want to invest in a fund outside of the United States.
I tell them the same thing every time. They need to understand that they are going to have extra expenses. For example, you have affluent family who live in the UK. They come to you wanting to give you money for your fund here in the U.S.
That’s a really good thing for you, but you need to sit down and see if it would actually be profitable to you.
REMEMBER THE COSTS
First you need to make sure you are being compliant with the SEC, the United States securities regulation.
Loan documents that will satisfy the SEC, without any help, will be around $30K at MINIMUM if you choose to walk into a lawyers office.
Through our program we help managers like you get these costs down to more reasonable $7K-$8K
Next, since your family is in the UK you now need to find a lawyer who understands English Law and American Law. Additionally, you will need an accountant who understands tax laws of both countries because you will need to pay taxes your English Investors.
You now just doubled the compliance you will need to have and increased your potential costs.
Don’t let that scare you though, there are perfectly legal ways to make this easier for you and I talked more in depth about them in a recent video on my youtube channel.
The beautiful thing about this though, is that these costs can be used as start-up write-offs for taxes on your fund. This can save you a lot of taxes which can hurt your bottom line return on your fund. The last thing we would want to do is to go negative!
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”– Warren Buffet
Now, for me personally I wouldn’t be able to explain or justify to my current investors why we would be taking on extra expenses if I were just bringing on one extra investor for the fund.
I probably would only do this if the new investor was going to put in a substantial amount of money or if I had multiple investors coming in.
I found this article on a founder’s perspective on international money helpful if you wanted to look at it more generally.
We need to understand the costs that are associated with international fundraising so that it helps us instead of letting it eat into our bottom line.
- Run your Numbers
- Consider easier and more cost effective ways to launch
- Use others knowledge and don’t feel like you are alone
We go over this topic a lot more in my course and provide coaching as well as an introduction to a growing network of other like-minded investors.
Let me know in the comments below what other questions you’d like addressed on this topic.
Happy New Year Everyone!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.