How to Raise Capital With No Network

Steven Weinstock (00:00) My guest today started an oil company in his twenties. Then oil prices collapsed. The tax law changed, and that business came to a hard stop. He did not quit. Today, Brad Blazar runs Blazar Group, which does business as Capital Connections. And he says he's raised more than two billion dollars from investors. He teaches founders and real estate operators how to raise money from high net worth. individuals, family offices, and RIAs. We'll get into that. He wrote winning at the Capital Game. He invests in multifamily as a GP general partner. And according to your bio, he has shared stages with people like Kevin Harrington from Shark Tank. I wanted Brad on because raising capital is the thing that stops most operators from doing the Brad Blazar (00:51) Yeah. Steven Weinstock (00:52) next deal. He has been doing it for over 35 years. We will get into how he got started, any mistakes he made along the way, and where money is coming from right now. Steven Weinstock (01:43) And welcome to the show, Brad Blazar. Brad Blazar (01:46) Hey, it's great to be here with you this afternoon, Steven. Great to be here. Steven Weinstock (01:50) I appreciate you coming on. We're gonna get into it. before we get into some of the nuts and bolts, I always like to learn about my guest. you left college at twenty-three from my research. you Brad Blazar (02:00) Yeah. Steven Weinstock (02:00) ended up running an oil business. How does that even happen? Could you walk me through it? Brad Blazar (02:04) Mm-hmm. Steven Weinstock (02:05) What does an oil business mean? go Brad Blazar (02:07) Yeah. Steven Weinstock (02:08) for it. Brad Blazar (02:08) Sure, yeah. Well, you know, I went to school to become an architect and was gonna use the architectural training to really go into real estate development. But like a lot of college kids, I responded to an ad in the local paper and was looking for a job to you know just supplement my income as a college student and CEO of a very small oil company hired me and said, you know, hey Brad I really like you. You're a quick thinker. You're kind of cocky. And I kind of like that. You got a little chip on your shoulder. If you can come into the office here between your classes and after school, we'll teach you how to basically raise capital. And I said, great. And so, you know, they got me securities licensed and gave me some training. And here I was working, I don't know, 12 to 15 hours a week between classes, and I was making six figures. And so I said to myself, wow, if I'm making six figures working twelve to fifteen hours a week, I wonder what I could do working a full 40-hour week. And so unbeknownst to my parents, I just kind of turned my back to finishing my education and went to work in the oil and gas industry. Went to work for a second company. Doing essentially the same thing, only to find out that they were somewhat dishonest, let's just say that. So we filed a class action lawsuit and we prevailed, but the investor base that I had assembled turned to me and said, Well, what are you gonna do now, Brad? And at the time I really didn't have any plans. And so they just said, Well, why don't you do the same thing, but you know, just do it honestly. And so I just kind of saw this huge door open up. I never drilled an oil well, knew nothing at all about running a multi-minute. Million dollar business, just knew how to raise capital. And so I, you know, went out and kind of went through the process, formed a business entity, got a securities attorney, and found a geologist. And the age of 23, I started a small oil company and we built that up over, I don't know, roughly 12, 15 years to a pretty nice medium-sized business with 35 employees. And I always tell people the real skill that allowed me to do this was learning how to attract and raise capital. And so did that for a long time. And as you said earlier, you know, oil prices plummeted, tax laws changed, the industry kind of collapsed. And that's when I dissolved the business and then went to work raising capital for other people. Steven Weinstock (04:28) So your initial job before you founded the oil company, you were working twelve, fifteen hours a week. they told you raise capital. What did that mean? Did they give you a list? Did they give you the Glengarry leads? but tell me what that means. You're a kid, you're working a few hours a week. What does raising capital mean? did he give you a script? You know, was it telemarketing just on steroids? Brad Blazar (04:52) Sure. Yeah, so yeah. So back then, you know, this was a course you know, a long time ago. they were basically buying list of accredited investors. Of course we know, you know, you can buy accredited investor lists. A lot of financial advisors do this to build their business. And so we were just largely code calling. You know, I was calling out the doctors and business owners and professionals. And, you know, when they hired me, of course, they kind of gave me a script and a blueprint and said, you know, this is the process. This is kind of how we do things. They said, you know, the biggest mistake is you don't want to pitch people too early in the relationship because they really don't know who you are. You know, there's no trust, there's no real relationship there. And so, you know, there's definitely a process to this. and I became very good at it. And so I was, as I like to say, dialing for dollars with a big smile on my face and was building a network of people. At the time, we didn't have Zoom. So, you know, I wasn't meeting with people this way in a virtual world. It was all done over the telephone. Most people probably had no idea that they were talking at the time to a kid that was 21, 22 years of age going off. To college because I was going to school at the time. But when I actually launched my business and opened the doors at the age of 23, it was still largely over the phone. And we were again buying a list of accredited investors. It was myself. I had a business partner at the time. And then we had, I don't know, maybe two or three salespeople that were doing what I was doing for these other companies. But then one thing really changed the way I approached raising capital. and I think the problem a lot of people have, Steven is you know, we're looking for an investor. And so so many people that are making phone calls, going to meetups, you know, going to all these different real estate conferences, looking for, quote, that next investor. Well, what happened in my business, I was very fortunate. I got a call one day from a friend of mine, and he was a very small registered investment advisor. Now I knew absolutely nothing about financial services at the time. But he said, Brad, I've kind been watching you and I think what you're doing could be very suitable for some of the clients that we work with. And I'm like, great. You know, so we get together for lunch and we get we get to know each other over the course of maybe, I don't know, four, five, six weeks, you know, as we say he was doing his due diligence. And then he basically proposed to me, why don't we just co-host an event? You know, I'll get 12 to 20 of my wealthy clients together. You know, you come in, you speak for 30 minutes and whatever, and we'll serve some wine, some re d'oeuvres. And so we did that. And Brad Blazar (07:27) In about two weeks, he sent me close to three million dollars. And I was like, Holy cow! Like here I am busting my butt, calling people for fifty and a hundred thousand dollars. And this one guy just sent me three million dollars. And so I got my little sales team together and I said, hey man, we're changing the game here. We're gonna get lists now of registered investment advisory firms. And if we can find three, maybe five more people just like him, I guarantee we can probably raise five times as much capital over the next year compared to what we had raised over the prior 12 months. And so that's what we largely did. And it was a major mind shift for me. It was understanding that I want to market to the one to reach the many. And so what I basically Teach people how to do, Steven is how to identify what I call these capital networks. They're people in our communities that have access to large amounts of wealth. And those are the people that we should be meeting with. Those are the people that we should be connecting with. Not just the RIAs, but perhaps what about your accountant? He knows other wealthy people. Have you ever asked him to introduce you to some of the other wealthy clients? What about an estate planning attorney, perhaps in your community? Maybe you should start taking some of these people out to lunch on a regular basis because they become great referral sources. And that's what's personally allowed me to raise in many cases hundreds and millions of dollars. And the best part about it, I'm not the one doing the work. They're doing most of the work for me. Steven Weinstock (08:59) So the nineteen eighties hit, oil prices collapsed, tax law changed. What actually happened to the business? What happened to you and what was your next step? Brad Blazar (09:08) No. Well, the great thing is we were debt free at the time, so we had no business debt. So I just like to say, you know, we did it the right way. We closed the doors. We kind of just collapsed the business. I gave my employees all severance pay, et cetera, et cetera. Sold off some of the business assets. And to be real honest, I took about two years off. I mean, you know, I was kind of looking for how do I now, you know, in my young 30s, having not completed my college training, go out into the work world and make again very mid high six figures, because I was doing quite nicely back then as a CEO and a business owner. I thought about law school, I thought about medicine, didn't want to do that. And so you know it's kind of for about two years bouncing around trying to figure out what am I going to do. And it hit me one day that my primary skill and what others would pay me a lot of money for was raising capital. And so I entered the financial services industry l largely as a professional capital raiser, you know, getting paid a salary, getting paid an override on the tens of millions of dollars that I was raising largely for other people, and then eventually moved into the real estate industry and essentially raised hundreds of millions of dollars for today, what are some of the largest real estate operators in the country. I mean, these guys have multiple billions of dollars. And so when you look at my Rolodex and you look at the connections I have, I mean I've raised money from every source you can fathom, retail investors, family offices, broker dealer distribution, sovereign wealth funds, insurance companies, you know, pension funds, et cetera, et cetera. And so when I retired a few years ago to start our consulting platform, Capital Connections, people that were new to capital raising would come to me. Certainly we can help them. But I also consult billion-dollar companies that are clients of mine because they want to go from perhaps one billion in AUM to three billion in AUM. And what they realize is the methodology of how they get to one will not work to get them to three, right? They need now institutional relationships, maybe building distribution on Wall Street. But what was really interesting throughout this entire journey is seeing how the larger deals get done. You know, seeing how a $300 million portfolio can get syndicated instead of a, you know, six million dollar smaller multifamily asset. And so you know that's largely what we've done over the years is just kind of scale our capital raising. Today, of course, we have capital connections, but I also am a managing principal in a fund called Crescendo Capital Group. And you know, we raise money just like some of our clients do. We focus primarily on the multifamily space, although we do have interest in other sectors like storage and of course student housing and data. we raise some money earlier in the year for a data center. but it's just been a really Brad Blazar (12:05) really exciting way to teach people that are in you know real estate or other businesses this is how we attract and raise capital and really do it at scale. Steven Weinstock (12:13) Yeah. Before you entered real estate and after the oil business, were you raising capital for other you know, before after you shut down the oil? What were you raising capital for? You said you were working for somebody, you were Brad Blazar (12:30) Sure. Steven Weinstock (12:30) working for other people. what kind what kind Brad Blazar (12:32) Yeah. Steven Weinstock (12:32) of assets or what kind of businesses were you raising capital for at that point? Brad Blazar (12:36) So the first company that hired me professionally to raise capital was a real estate company, actually in Houston, Texas. that was one of the premier real estate owner operators. they actually had trademarked what they do, which was pretty interesting. they invested in very large class A retail centers on major intersections. And so they essentially trademarked the phrase irreplaceable corners. Under the thought that you know any major corner in a large city trades at a premium because of the visibility. And so no other real estate operator or company could use the phrase, we buy irreplaceable corners because they trademark that. Raised millions of dollars for them and then went to work for a company raising again millions of dollars. They were based in California and they were in the equipment leasing industry, you know, buying large assets, leasing them out, distributing the cash flow to the investment. Yeah. After that, I kind of transitioned and I went to work for today what are some of the world's largest financial services firms, firms like ING out of the Netherlands or Allianz out of Germany. And what I was doing is I was raising capital for them, but really also working as what we call a wholesaler in financial services, you know, representing things like their mutual funds, their annuities. And after a few years, I then moved over into real estate. And for probably 20 years, worked for some of the larger real estate. Operators, firms like Blue Rock out in New York, firms like Waypoint Residential that you know today manages close to 50,000. residential units all over you know different states, firms like City National Rockdale out of New York. You know, again, they manage in the tens of billions of dollars. And my job was to be the head of capital markets. I mean I was the national sales director managing the portfolio of capital that was coming in to all these different businesses. And like I said earlier, you know, when I kind of decided to transition and raise capital for myself instead of other people in consult businesses, we started about six years ago. and we built now a global presence. I mean I coach people and mentor people in countries all over the world. We just did an event in Miami. I had people fly in from six different countries for my event. You know, and the fact that people would travel 30 hours from Australia to get in a room for a couple days with me and the family offices and the advisory firms that we assemble there, I think it's a testament to really what we built. Steven Weinstock (15:04) yeah, and it's good it was in Miami and not somewhere in North Dakota. So that definitely helps getting Brad Blazar (15:09) Ha ha ha. Steven Weinstock (15:10) people to fly the thirty hours. I'm a real estate operator. I deal with tenants every day, I deal with the lenders every day, I deal with sourcing deal flow every day, and I deal with investors every day. And I'm raising capital every day. I'm wearing many different hats. I I got into this business as a kid also. I started Steven Weinstock (15:30) in two thousand and one, I'm forty-eight today. Brad Blazar (15:34) Yeah. Steven Weinstock (15:34) started buying single family homes, saving some money, using it, learned about using other people's money to buy, and raising capital is definitely one of the hardest aspects I find to have. Brad Blazar (15:48) And yeah. Yeah. Steven Weinstock (15:49) And There's lots of ways to skin the cat and to try to raise. I'd had other people raise for me and they would get a piece. but ultimately, I felt that in order to raise capital, they have to like the deal, they have to like the asset, the investor, and it's not just speaking to them and and and you know, telling them what the deal is. And I find that during the tough times, which I I think now is one of the tough times, especially in the asset class that I deal with, which is multifamily. You Brad Blazar (16:21) Sure. Yeah. Steven Weinstock (16:21) have a lot of distributions not getting paid. You Brad Blazar (16:25) Mm-hmm. Steven Weinstock (16:25) have rates that are not going down. we all thought it would be going down at this point over the years. It has not. You have a lot of floating rate out there, you have a lot of floating debt out there, you have a lot of refinancing that needs to happen and can't because the rates are are not coming down. What would you tell somebody who has a deal under contract? either he has zero investors or he has investors that are just unhappy with the overall market. What should they do on day one? What should they do on day thirty? Brad Blazar (16:59) Yeah, that's a great question. I think you know the one thing that we try to explain to people is that you have to look at the investment that you have, or maybe the industry that you have. And number one, build stories around it, but more importantly, learn how to position it. What I mean by that is having raised hundreds of millions of dollars and having worked with a lot of financial professionals, you know, stockbrokers, registered reps, registered investment advisors, what they do very frequently is they take real estate and they market it to their client base as a fixed income alternative, right? So you have people maybe that are approaching or that are getting into retirement. What are they looking for? They're looking for cash flow, right? They're looking for tax benefits, they're looking for upside appreciation. So it's no longer quote, hey, we got a real estate deal. It's hey, you're looking at all of these other options over here to supplement your Social Security. And so what are you looking at? CDs, maybe bonds, treasuries, maybe you're looking at an annuity product that your financial advisor is bringing to you. And what are the rates? That those instruments pay. Over here, I got a real estate deal with an 8% preferred. It's going to pay out to you monthly or maybe quarterly. And by the way, you're not paying taxes on all of that because we got some great sheltering due to the depreciation pass through. So, this is really a great alternative that you might want to look at, Mr. and Mrs. Jones, as you're moving in that direction. So I think one of it is you've got to become a great storyteller, Steven The second thing that I would also advise people. To do if they don't have a network or don't know RIAs is build your own. And what I mean by that is there is nothing better in raising capital than organizing your own small investor event or meetup. You know, buy a list of accredited investors. There are companies out there that can take that list, mail invitations out to that audience. You know, obviously they use bulk rate, but you know, now direct mail, invite those people to a meetup, service. Some wine, serve some nice hors d'oeuvres and appetizers as an upscale venue. And the nicer the venue, the more people will show up. But just like I did with John, now you're not talking to one investor trying to get 50 or 100. You're in a room maybe with 25 families or 40 couples that have shown up there, and most of them are going to be affluent. The law of averages said you'll probably close 20 to 30 percent of that audience. Now you got seven to ten investors coming out of that room. That's how I would approach raising capital. And you had to assume a lot of people that are in that room have not invested in multifamily before. They're not struggling with the problems that a lot of these multifamily investors have linging over their heads with that quote skepticism or bad taste in their mouth. And so for a lot of the people that we're working with, that is a strategy that's working really, really well right now. It's basically hosting their own investor meetups and events. Buying list or leveraging some of the groups on social media or some of the other platforms like Eventbrite and Meetup to position them now in a room where they're walking in as quote a keynote speaker, as a person of interest, right? And so I think that is really if I were looking to raise capital and do so quickly, the approach that I would take, because let's face it, if you're trying to raise, let's say, five or ten million dollars over the next year, right, and the average investor is going to be giving you 100, you know. Brad Blazar (20:33) You're looking either for 50 people or 100 people at $100,000 per person. How many phone calls are you going to have to make to find those 50 or 100 people? Like the follow-up, right? The events you're going to go to to me, man, that's a lot of hard work, and trust me, it is because I've done it. Or host four to six meetups where you have 25 to 40 wealthy families. Now there's much greater certainty in the outcome because now you're walking into an environment where there's more than one investor. It's this concept, market to the Steven Weinstock (21:09) Okay. Brad Blazar (21:09) one to reach the min the many. Steven Weinstock (21:13) wow, that's that's great. That's real nuggets of wisdom, Brad. I know you gave me a hard stop over here, but I'm gonna push back a little. Maybe I'll ask you another Brad Blazar (21:19) Sure. Steven Weinstock (21:20) question, especially since it pertains to me. I I run a debt fund. I raise capital. Brad Blazar (21:25) Mm. Yeah. Steven Weinstock (21:26) we lend you know, some people call it hard money. we Brad Blazar (21:30) Mm-hmm. Steven Weinstock (21:30) put money in first position liens typically with a 65% loan to value. and we do it on small properties, on one to four unit properties. I like those properties, they're liquid, you know, they're as liquid in real estate as Brad Blazar (21:42) Sure. Yeah. Steven Weinstock (21:43) can be. and the fund is obviously open to accredited investors only. When you raise money for a debt fund instead of an equity deal, what do investors need to hear that is different? Brad Blazar (21:55) That's a great question. So obviously, if it's a debt fund, they're not participating on the upside. And so really what it's just a stream of income that is secured, obviously by the asset, where they're gonna get basically their principal return to them at a defined period in the future, whether it's a three-year note or a five-year note. We have a lot of clients actually that do exactly this very same thing, Steven where they're basically raising capital for debt. and so really what investors need to hear there is you are getting a stream of payments. And I don't know if your fund is structured with monthly distributions or quarterly distributions, really doesn't matter, but they need to hear that that is much more secure. Because it's actually backed by an asset as collateral. And so it's a collateralized loan that obviously has a lot more with the older people, because now it's collateralized. There's more safety to it than participating over here in the capital stack where you're unsecured. And there is, of course, that risk of an entire loss. And I think that's the difference here is you know, people that invested in multifamily, like you said earlier, where they are getting the capital calls, or worse yet, deals are going back to the lender, they've lost everything. That's just the fact of life. You lost the deal and you lost your investment. Over here, at least you have an asset that is securing the debt. And I think that's what I would focus on, is this is an asset back loan. And now because you're over here at a different place than the capital stack, you're a little bit more secure. Steven Weinstock (23:25) Okay, Brad. I would love to really talk to you further and maybe I'm gonna ask you for a part two. but I did I Brad Blazar (23:31) Yeah, love to. Yeah. Steven Weinstock (23:32) did mess up with the schedule, so I appreciate you coming on. just tell our audience where they could reach out to you, website, social media. I'll put it in the show notes. I know you have a book. tell us all about that. Brad Blazar (23:46) Yeah, just Google my name. It's Brad Blazar. You did a great job of pronouncing it. It's spelled B-L-A-Z-Like Z Bra A-R. Guarantee if you Google me, I'll pop right up there at the very top of your feed. Go to our website. We got not just one, but three great books, and the fourth come out soon. Follow me on Instagram. And you know, for people that reach out to me, I'd like to actually give everybody just a free gift. my email is info at bradblazer.com and just put in the subject line R A R I A handbook. We'll send all your listeners a free handbook that really teaches them how to approach RIAs, how to start that discussion, how to build those relationships. Because man, I'll tell you, one or two RIAs in your back pocket, it is a game changer in the world of getting deals done, raising capital, and getting the bigger deals done, because now you're transferring the role to somebody else. That has a network of affluence in rich wealthy people. Steven Weinstock (24:44) Brad Blazar, thank you. If this helped you, subscribe to the wealth clock on YouTube. Leave a rating wherever you listen. New stories and interviews every week. Brad, thank you very much. I appreciate it. Brad Blazar (24:58) You're welcome. Take care, Steven Have a wonderful remainder to the week. It's been a pleasure.