• Demystifying the Capital Allocator Model

  • Jan 28 2025
  • Length: 53 mins
  • Podcast

Demystifying the Capital Allocator Model

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  • Summary

  • My guest today, Jeff Greenberg, founder of Synergetic Investment Group, is a capital allocator whose business model focuses on identifying, vetting, and providing capital to sponsors by aggregating funds from his network of investors. Aggregating Investor Funds By pooling investor capital, typically $1MM or more, Jeff negotiates preferential terms with sponsors, such as higher preferred returns and better promote splits than individual investors could secure on their own. Through his fund, Jeff offers his investors the opportunity to allocate capital according to their preferences among the offerings he promotes. Negotiated Benefits for Investors Jeff explains that the delta he negotiates with sponsors is partially passed on to his investors through returns that are at least equal to or better than what they would achieve by investing directly with the sponsor. He retains some or all of the delta as compensation for his role in aggregating capital, negotiating terms, and conducting due diligence. Rigorous Due Diligence Together with a group of other capital allocators via the Connected Capital Fund group, Jeff utilizes a 250-point due diligence checklist to select and screen sponsors. This process includes analyzing business structures, assessing team competencies, and evaluating operational controls. Challenges in the Market Throughout his capital allocation activities, Jeff has raised a total of $6–7 million. However, in 2024, he raised only $100,000, reflecting the challenges of the market. When possible, Jeff invests alongside his fund investors to align his interests with theirs. Concerns About the Allocator Model Jeff expressed concern about other capital allocators who lack operational experience and fail to conduct thorough due diligence. This can undermine the quality of deals in the industry and damage the reputation of the allocator model when poorly vetted projects fail. Dispelling Misconceptions He also addressed the misconception that the allocator model is a quick and easy path to wealth. Many new entrants, lured by promises of simplicity, fail to appreciate the effort required to build trust with investors, properly vet sponsors, and manage deals effectively. Listen to this episode, meet Jeff, and learn more about the capital allocator model. ***** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe
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