How to Raise Capital for Commercial Real Estate Without Chasing Investors | John White, Capital Context

John White (00:00)
So we purposely just rely on what we call basic marketing best practice structure, which is that the client wants the outcomes. And he wants the outcomes performed in such a way that it’s predictable, so we always try to keep that in mind. The other thing that we try to do, which you can appreciate from being in the real estate business, is that you’re not selling real estate. This is the first thing I tell a client: “You are now a securities salesman.”

Issa Hanna (02:01)
Welcome back to another episode of the Real Estate Pros Show. I’m your host, Issa Hanna, and today I have John White with Capital Context here to tell us about some exciting new software. John, welcome.

John White (02:11)
Hi, how are you doing?

Issa Hanna (02:12)
Doing great. Excited to have you, and excited about this new software you’ve developed. So for my viewers at home, can you give them a rundown of what you’ve got cooking, and also what a day-to-day looks like in your world, John?

John White (02:22)
Our market is commercial real estate companies that are primarily developers or fund managers who go out to the outside world to raise capital to build or acquire assets like apartment buildings, industrial parks, etc. So that’s our market. What we provide to them is complete internal infrastructure, from identifying who the investor is going to be all the way through acquiring and reaching out to that investor, and then providing investor relations for that investor. And then we seek out—again, by the nature of this business, these are the type of people who continually do raises for every new project—so at that particular point, we help them prepare for the next raise.

Issa Hanna (03:07)
I love this. We were talking before and you said it’s a whole new category for these guys, so it can really help them.

John White (03:13)
It’s a new category in the sense that you can go out to the marketplace today, and when people raise capital, they might use a CRM system and think that’s really great, or they use spreadsheets. A lot of these people started with people they know—their own internal network. The moment that they had to reach out to strangers, that becomes a little like, “I have to keep track of this. I have to know who to talk to,” and stuff like that. So everybody to some point has used some little piece to help organize this.

One of the things I’d like to point out, which is the thing that’s not quite obvious, is that if you’re a commercial real estate guy and you’re building apartments or buying apartments or building hotels or whatever, that’s your expertise. What the world demands today if you have to go out to the marketplace—the good news is there’s thousands of capital sources to talk to. Again, today’s digital world requires a certain amount of digital marketing expertise, which isn’t inherently part of any commercial real estate company. You can give a person all the tools to say, “Well, I’ll go to this website,” but are they a digital marketer who knows how to use the outreach tools of email, LinkedIn, Meta, et cetera? Do they know how to write messages? That’s an acquired skill set. That’s a profession.

Our staff not only provides the software to manage all that, we provide a dedicated person to do all that for them so they don’t have to learn yet another skill set. The only skill set they bring to it is essentially talking to the investor about why they present a good return on investment for them.

Issa Hanna (05:44)
Love that. And you’ve custom-tailored this system for these guys, so it’s going to start off from A and take you all the way to the finish line.

John White (05:51)
Well, let’s say the way that you first engage us, in the first three weeks, here is what we accomplish: We build an investment portal for you in your brand under your website. We build the pitch deck. We do all the legal documentation ready for counsel review. We essentially do all the campaigns; they’re all prepared with all the messaging and all those strategies for the first 45 days.

So at the end of three weeks, you are ready to take capital and go out and start marketing in the marketplace to investors we have selected from our database. We have a database of capital sources, and the capital sources are high-net-worth individuals, family offices, and registered investment advisors. These are the people who would readily write a check from $50,000 to $1,000,000. So we have a database, and we select people after a close analysis of your offering to match with the best people in our database who would essentially do your type of investment. So that’s all done within three weeks.

Issa Hanna (06:57)
Wow.

John White (06:58)
So on launch date, it’s all prepared. We launch the whole LinkedIn methodology and the whole email methodology. We’re out there contacting people and building authority because, again, we actually build educational content.

One of the myths in this particular business is: if I’m going to ask you for $50,000, what is the first thing that I do? Do I call you up and say, “Here are all the points of the deal, it’s a great deal”? If that’s the only thing he sees, the mindset of the investor is, “Who are you? You’ve got a great deal, but who are you to ask me? You’re not asking for $500, you’re asking for $50,000 or $100,000.”

So we use educational material to prove that you’re an expert in the field—things that show what you’re doing is out there in educational material that goes into postings every day. In other words, it might be a posting on “How to Recognize the Best Multi-Dwelling Apartment.” You’re the author, or the company’s the author, so it starts to build up notoriety. People who respond to that have essentially identified themselves as somebody who is interested, and now he knows who I am. It might take four, five, or six touches like that before the guy says, “I’d like to talk to these guys.”

By the time he talks to you, he knows who you are and what you have to offer. So hopefully when he gets on the phone with you or on a Zoom call, he’s trying to say, “Okay, are these guys I like? Can I invest with these guys? Do I trust them?” Because if you’ve been in the real estate world for three hours or three years, it’s really that you deal with people you trust and know. We don’t break those rules. The deal is important, obviously, and even at the front end, we help the person structure the deal. We have to be convinced in our due diligence before engagement that there’s a 65% chance or better that, working together, we’re going to complete this offering.

Issa Hanna (09:04)
I love that you guys are bringing the capital raisers to the investors on both sides. These are pre-vetted, and then it takes away a lot of the dance that happens.

John White (09:17)
Well, it’s the dance in the same situation. Let’s say for family offices: there are 6,000 family offices that are quite active that invest on behalf of families like the Rockefellers or some of the large families. There are 6,000 of them out there across the world. Essentially, some have a preference where they’ll never invest in private offerings. Well, there’s no reason to reach out to people who don’t invest in private offerings. You want to identify people who invest in private offerings like multifamily, or who invest in the US—say they’re from Dubai and show a profile that they’re looking to reach out and make these types of investments in the US marketplace. Or in some cases, we’re international, so it might be Mexico or Europe.

Again, we’ve essentially made our software and our strategy international. That’s quite important because the Mexico market is very strong, Latin America is very strong right now, as is Europe. We’ve had conversations with people in Australia and India. Best practices are always best practices whether they’re here or in the US, so we get a lot of these things settled on the front end. Once we understand the strategy, then we help them execute and put that together. It’s a hybrid: partly our expert services together with our software comprises our infrastructure.

Issa Hanna (10:49)
I love that, and that’s what tech, especially this new AI stuff, is doing. If you count on it to do all the work for you, some people try that too hard, but to integrate it—that is where the sweet spot is.

John White (11:00)
That was a good point. You have to integrate it. Because again, if you get a CRM system, that’s great, but the CRM system is going to remind you that you’ve got to make a call next week to this guy as part of the process. It didn’t identify who you should be talking to. So you get a great CRM system, you look around, and you go, “Where are the investors?”

The big myth of the marketplace—it’s a big myth—is: “If I get a mailing list of 45,000 investors, the more that I send, the more that I raise.” Well, that’s true in consumer marketing. Whatever is true in consumer marketing does not apply to this marketplace. This is a relationship market. So again, you have to live with the best practices on what establishes a relationship with essentially professional investors.

Issa Hanna (11:53)
Exactly, there’s no replacing the old-school approach. The thing you’ve got to do, which you guys have figured out how to do, is modernize it. I love Capital Context and I love the idea. I want to rewind a little bit and get the history of Capital Context. How did it come about?

John White (12:07)
Without the risk of being boring, I’ll just tell you it probably evolved over four decades, right? I started my career in the mid to late ’70s in Silicon Valley. I went on through my career in Silicon Valley to be a venture capitalist, mostly as a startup CEO in nine different companies with public offerings, etc. Early in my career, somebody said, “What you really do as a CEO is—CEO just means Cash Extraction Officer. You’re always raising capital, right?”

What I’ve learned over the years—in the last 10 or 15 years, I really stopped being an operational guy to focus on essentially helping companies do private offerings. Then in the last five or six years, I got into real estate where I have my own fund in hospitality. What I bundled together in Capital Context is based upon that knowledge of what works and what doesn’t work, put into a system of software and services. So that’s how it evolved.

I saw a need in the marketplace because the market in the last four or five years, as everybody knows, has essentially changed and evolved, especially in real estate capital. 15 years ago, you could essentially go to broker-dealers. SEC broker-dealers are completely out of the game in terms of not wanting the exposure, so it’s left a gap in the marketplace to say, “Where do I go for capital?” Not every particular investor can get institutional capital. In other words, you can’t get a Wall Street guy to come into your deal for $100 million. So we specialize in what we call the mid-tier of the marketplace. The guy’s successful, he knows what he’s doing, and he’s got a great track record, but he’s not quite big enough for institutional capital.

Issa Hanna (13:59)
I love that. You have so much experience in the game, and with software and tech right now, AI can leave your legacy and your imprint on the real estate market. I love that because you can’t teach the type of knowledge that you have from building companies.

John White (14:16)
Well, regarding AI, it’s because I’ve been there and done that, I guess. I was doing AI companies or was involved in AI companies 30 years ago in Silicon Valley, which all went out of business, right? So AI to me is a tool, because now our compute power has caught up with the ability to implement real AI. You could comb pages and pages on my website for the presentations, and we never say “AI” once. It’s because AI doesn’t do it for you. AI only works based on how somebody has enabled it to work for you.

In other words, how do I get an investment into the marketplace in three weeks? Three years ago, it would take me two to four months because I’d have to write everything manually. So again, I have a whole AI module that we developed that essentially automates a lot of the processes underneath the covers. All the sponsor cares about is: “We could be up and live in three weeks?” Yeah. I used to say years ago when selling mainframe computers: “Why do you care if I had 27 mice in a closet someplace with calculators? Do you care how I did it?”

Issa Hanna (15:29)
As long as it’s there and as long as it’s presented, why not?

John White (15:34)
As long as you produce the results, yeah. This will shake itself out in the marketplace in general. Everybody thinks from a marketing standpoint, “If I attach AI—this is an AI product,” they don’t realize there’s a complete disconnect with the actual people who want to use whatever they’re doing. AI is only a concept to them. They think, “What makes what you’re trying to tell me better because you used AI? Am I supposed to automatically believe it’s better because you used it?”

So we purposely just rely on what we call basic marketing best practice structure, which is that the client wants the outcomes, and he wants the outcomes performed in such a way that it’s predictable. We always try to keep that in mind. The other thing that we try to do, which you can appreciate from being in the real estate business, is that you’re not selling real estate. This is the first thing I tell a client: “You are now a securities salesman.” In the sense that the asset or what you’re doing is essentially going to produce income or appreciation for that security, but it’s still a security—which legally, it is. The people who buy securities are buying based on, “Where do I put my money to get the best return on investment, and what is the risk?”

We actually teach people—if you look on the website, there’s a 38-lesson course in video to teach a sponsor step-by-step in four-minute videos—to really, at the end of the day, teach him he’s a securities salesman. We impress upon him that when he talks to somebody, he has to be in the mindset of a person evaluating the security. He doesn’t care how good the hotel looks or how many pools you have. That’s important, but that’s not what he’s looking for. So you have to put yourself in that mindset as a sponsor to be successful: you are selling a security.

Issa Hanna (17:37)
100%. I know especially real estate investors and family offices are looking for that safe investment. They’re looking to deploy money and see what percentage return they can get back on that money. They care about, like you said, the bottom line. I always say on the show: “If it makes dollars, it makes sense,” and that’s it.

John White (18:01)
Over the years, I’ve counseled hundreds of startup guys, and the biggest real estate guys make the same mistake. The biggest thing a startup guy does when he gets an investor is try to tell him how great his widget is. Meanwhile, all the investor is thinking is, “Can I trust this guy, and how much money can I lose in this deal?” That’s what they’re thinking while hearing about features as if they’re buying a consumer product or service.

Once we accept an engagement, we have to believe that the guy is on the same page with us—that he’s buying into the concept that he is selling securities. Because if he doesn’t do that, as much as we try to help, he’s not going to be successful.

Issa Hanna (18:50)
100%. Like I said, if you can assure somebody, “Hey, this is your return, it’s a safe investment,” and show them that you care about their money, that goes a long way. It goes back to that old-fashioned approach: business relationships are built on people doing business with people they like. If you show them that you care and adopt the mindset of a securities salesman, you’re going to go a lot farther than the guy who’s just trying to chase a dollar and bring in as much capital as possible.

John White (19:17)
Yeah. Well, when you take that first dollar of outside money, you have a responsibility at that point.

Issa Hanna (19:22)
100%, you’d better take it seriously. Capital Context brings all that seriousness and provides a process that takes you all the way from A to Z. Looking to the future, you guys are pioneers right now in this space. It’s a small niche, but there’s definitely a huge demand for it, and it could make capital raisers and investors a lot more efficient in their businesses. Looking down the road in five years, where do I see Capital Context?

John White (19:54)
At some point—probably around the three-year mark or within that period of time—Capital Context will become attractive to larger companies. Once we cross the mark within two to three years showing that this is something people need to raise capital, just like you have to have an accounting system and things like that, the company will start to have a market that will scale faster. At the end of five years, I would expect it to grow into a situation where it will have high penetration in our market—around 20% to 30% of the market share.

It will continue to rise. There’ll be other competitors, other people who do it, because a lot of companies make money being the second guy in after the first guy establishes demand and they draft in behind them. We would expect that, but in five years, if we execute properly and progressively keep getting further into the community, I would see a 20% market penetration and probably around a $100 million market cap. This isn’t going to be a billion-dollar company, but a $100 million market cap at the multiples we’re looking at is a fairly good return.

Issa Hanna (21:18)
Definitely a great return, and I like the realistic projections. Someone is going to come in and imitate what you’re doing once you create that demand. I love how forward-thinking you are, and the numbers and projections show how analytical and knowledgeable you and your team are at Capital Context. Right now, you guys are very close to officially launching, so this is the ground floor.

John White (21:47)
The fact that we have an operational product… to put my venture capital hat on, a venture guy looking at this as a seed deal says, “Come back when you’ve got your first client, when you have revenue, or when you’re cash-positive.” Where we are in terms of launching is somewhat subjective in the eye of the beholder. One of the things we went through in venture capital after the dot-com era was that a lot of institutional partners like endowment funds got burned a little bit. So instead of doing seed deals, they’d say, “Come back to us when you get $5 million in revenue.” How do I get to $5 million in revenue if you don’t give me any money? It’s a contradiction, right?

So you go through that process, but that’s where we are: we’ve launched, and now we’re going through the hard daily work to build our brand and relationships without getting diverted off our core methodology. So often in a new company, a dangerous thing that can kill a company three or four months after becoming operational is someone running into the office saying, “I got a great deal from General Electric!” and getting taken off-track by an opportunity instead of staying true to their core structure.

Issa Hanna (23:15)
100%. You guys are definitely true to who you are, and you care about the people who are going to be involved with Capital Context. As the only service of its kind right now, it can make capital raising and investing far more efficient. For my viewers at home—we have a pretty big community of investors here at Investor Fuel, including private investors whose ears are perking up—where can they get ahold of you guys? How can they find you?

John White (23:55)
CapitalContext.online. If you go to the website, it’s always growing. I have a whole resource section there that has six different reports on all these topics. On the website, there’s a way to click into our calendar to talk to us.

The most productive call is going to be from someone who has reviewed our material. We have a one-page overview on the website showing how it works, with two videos totaling eight minutes where my marketing lead walks you through what we do on day one and what happens when you go live. Once a sponsor understands that, they can evaluate how their deal fits into our structure, so when they get on a call, it’s not a cold call. We don’t want to put a client on a cold call with someone who knows nothing about their company.

When I make a connection on LinkedIn, a high percentage of people text me right back on LinkedIn saying, “Can we talk?” We also have partner programs for professional advisors in real estate capitalization and syndication, like securities attorneys. We have a whole separate track for them. For example, I got off a phone call this morning with a contact in Germany to partner with him as a professional real estate advisor to bring our product into the German and international markets. My software and services are ready today, but I don’t know the European Union or Far East marketplaces like he does. Every business is wise to build affiliate relationships that help expand reach. If an advisor or attorney you trust suggests using a tool, you can’t replicate that kind of endorsement easily.

Issa Hanna (26:41)
You can’t replicate that experience and knowledge, for sure.

John White (26:45)
Yeah, so that’s essentially our approach to this.

Issa Hanna (26:49)
I love the transparency, the forward-thinking approach, the knowledge you’re bringing, and the creation of this demand in a space where it’s truly needed. For my viewers at home, if you’re interested, check out Capital Context on their website for a fully transparent rundown of who they are and what they do.

Now, John, I want to get some general advice from you for our younger audience regarding building relationships and growing a network—the most important thing in our business. If you could give a young professional one piece of advice on how to start growing their network, what would that be?

John White (27:50)
I like new entrepreneurs. Their field might be real estate or something else. I wrote a book called *Art of the Startup*, which covers the mindset built over 40 years of knowing you’re going to fail and you’re going to succeed, and focusing on what matters to be successful: your enthusiasm to build something.

The one simple piece of advice I learned the hard way: when you first go into business, plan it like a plateau. Look at your first plateau as doing something within six months that starts to produce revenue to keep you in business. From that plateau, you can pay off your credit cards or pay back your family, and then move to the next level, and the next level after that. So often, people come in with a huge dream and think nothing is satisfying until they build that entire dream. You can still reach the big dream, but planning in plateaus ensures you don’t go out of business or run out of money trying to get there.

Issa Hanna (30:10)
I love that. Amazing advice, John, coming straight from the guy who wrote the book on it!

John White (30:17)
Yeah, I’ve written a couple of books: *Art of the Startup*, and another book called *Capital Raising: The Facts and the Myths*. Everyone wants to promise you money and say, “Give me $20,000 and I’ll find you investors.” I call those people “finders.” My book breaks down what is true and what isn’t so you know who to stay away from.

When you’re starting out in real estate or business, you reach a point where all you want is for someone to give you money, and you become less discerning about who that person is. You often have to go through two or three failures to learn who not to deal with. In Silicon Valley, we’d ask two qualifying questions:
1) “Are you the person who can write the check?”
2) “How are you going to help me beyond money to accomplish what I’m doing?”

If a young entrepreneur can learn that discipline, it saves them from bad situations. Angel investors, for example, can be tough because after a company goes public, some think their money equals intelligence when it doesn’t. They give you money and then try to run things. If you need outside capital, think it through so it stays within your guidelines.

Issa Hanna (32:20)
100%. Your name and reputation are super important in this business. Just like a real estate investor has criteria, you have to have standards where, if a potential partner doesn’t meet them, they aren’t worth doing business with. Sometimes stepping away saves you more money in the long run than doing a bad deal.

John, amazing advice and incredible knowledge. I’m super excited for Capital Context and how it brings cutting-edge technology to help capital raisers and investors get deals done quicker. I’d like to thank you for coming on, and I’d love to extend an invitation for you to join us again next year.

John White (33:14)
I’d love to.

Issa Hanna (33:15)
Thank you so much. I would love to check in on your progress and see the new features down the road. To my viewers at home, if you enjoyed my conversation with John and want to see more like it, make sure to hit like and subscribe. Until next time, the Real Estate Pros are out!