Either you borrow the money, you partner with someone that's got money,

or you raise the money through an SEC approved manner. So I know that if that business doesn't go well, I can chase Mark down personally. And a smart lender isn't even going to stop there, because they're going to play like the bank. That's what I want. If Mark doesn't pay me back, I have some assets I can go against. Be responsible because if you do a good job on this deal, they're going to be the first ones to loan you on the next deal. Make sure you're clear on what you're willing to give up. Document it as if your enemies and then operate as if your best friends. Welcome everyone to the Main Street Business Podcast. This is Matt Sorensen, joined by the incredible Mark J. Kohler. We're excited to be with you today because we're talking about money. You can't get any better than that. Yeah. Let's go get it. I know. Let's go get it. We're excited to talk about this because it's actually interesting. The more successful clients we meet with, they always imply and are actually

quite clear about it. Finding money is easier than finding deals. And that, it's pretty fascinating

because the sooner you learn some of these techniques, you're like, man, I can pull this off.

Yeah. It's exciting. And so we want to talk about the rules on how you raise money. How do people actually raise money, whether it's a small business or a real estate deal? What are the three ways? And Mark and I over the 10,000 consults. I remember this is like probably 10 years ago, actually. It was probably around 5,000 households in. He and I, we talked about, we're like, how do we explain this easy to clients? And we're like, you know what? After hours of debating it, we settled in on three methods and you have to fit into those three boxes. And then it's simple. It's paint by the numbers. It's freaking easy. You can create a masterpiece of raising capital. You just got to decide your three lanes here. We're going to outline it for you. And other than getting charitable donations

or some sort of bribery or blackmail, these are the three main. Yeah.

Grandma dying is not on the list. I hate to tell you, sorry, I mean, that might work for some of you.

But, yeah, marrying into money. That's always in the top five. That works too, you know. But sometimes

you pay the price for that.

Yeah.

My dad always... Sometimes the interest rate on that debt is not worth it. My dad used to say, this is when I was in dating. Yeah. Like 35, 40 years ago. He was like, hey, it's always easier to marry a rich girl. Or so you'd say, it's just as easy to marry a girl that's rich than a girl that's poor.

And I was like, I don't know if you know my dating pool dad.

You haven't introduced me through a lot of billionaires lately and their daughters. Yeah. Yeah. But anyway, no, that's okay. All right. Well, let's dig into it. And let's just talk about the three methods. Bottom is to give you a quick preview. We're going to talk about someone being a lender to you and lending money, someone being a partner to you, where they're the cash partner, they're putting in money on the deal, and someone just being an investor to you. Those

are three distinct and different ways to raise capital, three different sets of documents,

rules you got to know, and deal structures. Yeah, and pros and cons. And I'm just going to say another way, either you borrow the money, you partner with someone that's got money, or you raise the money through an SEC approved manner. And so you're going to a security route. You're going to partner. You're going to borrow or lend. And so that's it. And they come with pros and cons. Now, let's throw this out too

right out of the gate. It cannot work when you try to blend them. And I know it's so, you think

it's easier to raise money when you blend, they'll borrow and the partner concept. And the term

that's out there on the streets that is just, I'm going to just get this

out of the gate right away if I could, is this participating note. You're trying to raise money and you say, hey, I'll give you X percent on your money and interest rate. And then when we sell, I'll give you part of the deal. Okay, you just blended two lanes. You can't drive in two lanes. you're going to get a ticket. Can't do that. You're going to be a problem? You like that metaphor?

I like that. I like that. What about the guys on the motorcycles that are splitting the lanes though? Yeah, yeah. Well, they're going to die. You didn't account for that. They're going to account for that. Yeah. So you don't want to try to do that. Yeah. Yeah. Because what you're doing there, by the way, is you just did a partner model. That's not a note. If they just, you just cut someone in the profits of the deal, they're paying them interest, too, but now they're cutting on the profits. They're a partner now. And now you've got to follow the partner rules and think of the partner issues and there's liability concerns. There's, there's benefits there. We want to talk about the partner model. Mark and I have done it plenty. but they're going to go, no, no, no, no, they're just a lender. And I'm going to give them a piece of the action.

No, it doesn't work that way.

Welcome to a lawsuit where they're going to burn anybody that's getting a piece of the profit. That becomes a general partner. Oh. So you can't have your cake needed to. So that's rule number one, you have to stay in one of these three lanes. And again, there's pros and cons.

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