Why we don't advertise our offerings and how that improves inclusivity

After bringing half a dozen offerings in the first 4 months of 2022, the careful observer may notice one theme: we don’t publicly advertise upcoming/current offerings. In fact, we won’t publicly announce investment opportunities until they’ve closed. Many investors encourage us to advertise our offerings on platforms–especially those that are optometric focused. However, there are several key reasons why we keep our investment opportunities private–and they center around our desire to include a wide diversity of investors.

When Walt Whitley, O.D. and I created New Sight Capital, our goal was to bring about a pathway for other optometrists to achieve wealth growth that did not depend on patients or insurances. While we are both passionate about the modern evolution of optometry, we understand its unique challenges and want to help other ODs find alternatives for financial growth. Our second intention was to include as many ODs as we could in our investments. There’s a great diversity in stages of personal wealth among ODs. We didn’t want our offerings to be reserved just to OD colleagues that had millions of dollars of net worth or those in the later years of their careers. Walt and I wanted to find a way to get younger ODs involved—and ODs who perhaps were in the earlier stages of their financial growth.

In order to accomplish these objectives, we decided to take the pathway of 506b offerings. To provide a little more context, most apartment syndication opportunities these days fall under two categories: 506b and 506c. They are actually two exemptions to SEC law under which lead sponsors can offer syndication investments to private investors. There are very key differences between the two exemptions. In 506b offerings, the investments are open to accredited AND non-accredited investors. Accredited investors are those who either have: $1m net worth excl primary residence, $300k joint salary, or $200k single salary. Non-accredited investors, also called ‘sophisticated’ investors are those that do not meet those criteria but have other qualifying experience: investing in real estate or investing in other areas (including stocks) or extensive business or financial-related experience. Also, in 506b opportunities, accredited investors do not have to be verified by a 3rd party. They simply self-attest their status.

What’s the major restriction of 506b offerings? They cannot be advertised publicly! The 506b exemption legally prohibits the public advertising or announcing of these investment opportunities. You should never see live or upcoming 506b offerings on facebook or twitter, etc. For this reason, they are often called the “friends and family” offerings. By that, it means 506b offerings can be shown to investors that are previously known by the lead sponsor or the entity bringing the offering. That’s why we go through a qualifying process with our investors. Part of our registration on our website asks extensive questions about investing experience. We also schedule qualifying calls with potential investors so that we can learn about their experience and whether our offerings are appropriate for them. Only once a person has been qualified as an investor are they permitted to invest in our offerings.

How is a 506c offering different from a 506b offering? A key difference is that 506c offerings can be advertised and announced publicly. They are often advertised on social media and other websites so that any person can see them without being first qualified by the sponsor. What’s the downside? 506c offerings are only open to accredited investors! And, the accredited status needs to be verified by a 3rd party in some shape or fashion. Non-accredited (sophisticated) investors are not allowed to invest in 506c (publicly advertised) apartment syndication offerings.

While we believe we could reach a much broader audience by publicly advertising our investment opportunities on social media or at optometric conferences, we know it would automatically exclude a certain portion of ODs. There could be a scenario someday where we bring about a 506c offering, but our desire to bring apartment investments to all ODs will always have us firmly rooted in 506b (inclusive but private) offerings. And, that keeps us from publicly announcing current and upcoming offerings.

If you’ve not registered with us already, please do so here. As this whole article points out, the only way to be qualified to view our offerings is to go through our registration process.

Happy Investing!

Russ.