In this episode, we're joined by Jake Marmulstein, co-founder and CEO of Groundbreaker, an investment management platform that helps real estate syndicators and fund managers automate and streamline fundraising, investment management, and investor relations.
Today we speak about the biggest inefficiencies in syndications including distributions and K-1s, operating agreements, and investor reports and communication.
Jake began in real estate working at a REIT. This gave him exposure to the real estate industry and the process and workflow that goes into larger deals. He founded Groundbreaker right after the TCJA of 2017, there was a lot of buzz in the industry about how this legislation would impact capital raising. Groundbreaker was designed to create an easier way list a deal professionally and gain access to investors. Jake and his team believed they saw inefficiencies around raising capital and managing investors.
It's difficult to provide investors with a clear display of the amount of principal they have invested vs. the other activity on the deal that impacts their return. This is difficult to do with Excel or another tool -managers must go pull the data, move to a report, and send to an investor. In Groundbreaker, investors can see this information 24/7 on the aggregate or on a per deal basis. This is visible as a dashboard, and the reports and mass communications can be sent with just a few clicks.
Distributions are another area of inefficiencies, with checks and ACH. Groundbreaker automates the distribution calculation and can automatically send the funds via ACH.
For Operating Agreements, Groundbreaker helps store this information, produce templates, and disseminate the information to investors. Once K-1s are ready, they can be dragged and dropped into a sequence that will send them to the relevant party.
Jake notes that it's important to be conservative with underwriting and a bit more pessimistic when projecting deal performance. This also applies to the projections for raising capital. Many investors overestimate the ability to raise capital in a short time frame. There are many moving parts in syndicates, it's wise to make sure the deal isn't over-complicated.
What Makes Groundbreaker Unique from Other IMS?
Groundbreaker is very intuitive and it's easy to get started with the platform. The simplicity and ease of use and the professional appearance are the biggest draws. Payment processing is included as well, so this process is easy. Groundbreaker helps syndicates and fund sponsors save time on reporting by maintaining this data live.
Research and Development Tax Credit
For business that are developing a unique product or service. These business can apply the funds they have spent on R&D for this tax credit, and a certain % is taken as a credit. Previously, the R&D Tax Credit would count against profits. Now, the credit reduces the SS tax on every single payroll. This is Sec. 41 of the tax code.
Learn more about Jake and his work: https://groundbreaker.co/