Investing with friends and family can be a great way to pool resources and make big investments, while spreading out the risk. But it’s important to set some ground rules before you get started. In this podcast, Travis Smith, Ben Fraser, and Jim Maffuccio discuss the pros and cons of investing with “tribes”, reducing risk, and some tips for making the process go smoothly.

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Investing With Your Tribe – feat. Travis Smith, CEO of Tribevest

Welcome back to the Invest Like a Billionaire™ podcast. I am your co-host Ben Fraser joined by fellow co-host Jim Maffuccio. And today we have a really awesome guest Travis Smith, who is the CEO of Tribevest is joining us and Travis actually comes recommended from one of our favorite investors. Who uses Tribevest and super excited to dive into what Tribevest does and how they help investors get into these kind of private alternative investments.

So Travis, thanks for coming onto the podcast. Ben and Jim, so glad to be here. Been looking forward to this. Thank you for having me. Yeah. So give us a little bit of background on, on you and it’s a cool story. How you started Tribevest and really what you’re doing for investors through the platform.

Tribevest makes it so we can level up and team up with those that we know and trust. So we don’t always have to go it alone. Tribevest is a platform that makes it easy to form an investor group within 48 hours. And so you can come together, pull your capital and transact as an entity and then giving you all the transparency and dashboard for everybody to see everything they wanna see transactions, documents cap, table, everything.

That’s what we do in a real nutshell in terms of how where’d this come. We’ll have to go back 13 years ago when my brothers and I were on a fishing trip that we couldn’t afford we were fresh outta school had good jobs, good incomes, but we knew that we had to figure something out more than our incomes, our 401ks, and this idea of just retiring at 65.

Wasn’t gonna cut it for us. And everybody we knew that was out there financially independent, financially free, really on a wealth journey. They were investing in real estate and and we wanted to too, but we realized that, you need capital to to break into that asset class. And we just didn’t have the lump sums of money.

So we came together. And over a few beers and pulled our capital, formed an investor group, opened up a business bank account and started pulling our capital. And at that moment we were investors and we’re in a position to now participate in deals. We could have never done on our own.

And now it’s been 13 years later, it’s changed our lives. We’re investing in things we could have never done on our own. And and yeah, it’s changed our lives. People eventually started asking us, wait a minute, could you help us form an investor group too? And that’s when we set out to build the platform we wished we had, and we call that Tribevest.

Very cool. So let’s break it down a little bit, cuz it’s a pretty simple concept but pretty powerful. Especially for those, like you were, when we were just starting out just dipping the toe and getting familiar and invest. These types of opportunities, but not having to come up with a really big lump sum.

So the idea is you find a few friends and family, you form this entity and you all put a little bit of cash into the entity and that entity then goes and invests with a sponsor or an operator. And a lot of times these operators or sponsors have minimum investment thresholds. A lot of times it’s, $50,000 and above, but.

If you get, five friends and you each put $10,000 into it, you can invest through an entity into that deal or opportunity for a much lower basis. And so you can diversify across more deals. You can get access to deals that maybe you couldn’t on your own. And you guys basically is a platform, provide the services to help facilitate those kind of what you call tribes.

Is that accurate? Yeah, said. Yes. And we, we didn’t invent this by any means. People have been doing this forever. It’s always been a very antiquated process, very expensive. You have to find the right attorney operating agreement, opening up a business bank account.

All these things make this kind of a non-starter great idea in theory. Somebody has the burden of pulling it all together, right? And we call that person the founder of the tribe and without Tribevest, it’s just, it’s more trouble than it’s worth, I guess is one way to put it. But with Tribevest, we make it so easy.

So inexpensive that it really becomes a no brainer in terms of a strategy. And you mentioned a lot of great points. Passive investing into real estate is a huge vertical for us. That’s a lot of our customers are doing exactly that. And I don’t care who you are, like writing a $50,000 check, a hundred thousand dollars check it’s hard.

And and what this does is it gives you the ability to invest in more deals, right? You just don’t have to say no to deals. You say yes to the ones you like and you participate in and sponsors, not every deal is a home run. But sponsors do have a proven track record. So can I invest in every deal, for example, versus maybe every fifth one or every 10th one.

So that’s just a great example of how you can diversify. And another missing piece other than just getting over a threshold, is, as a private or a passive investor, we say passive, but they’re pretty active. Like they wanna get to know the, they wanna get to know the sponsor. Rightfully so there’s a lot of active due diligence that goes on. And when I have a tribe of five and they’ve talked to Ben and Jim, and done a couple of deals with with you, with you, for example that trust transfers, it transfers. And all of a sudden I can not have, I don’t have to invest, hours and hours calling, thinking about this on my own, the fact that I know my.

Buddy Sue has already worked with you guys is enough that I can shortcut right to it. Do I like the deal? Let’s go, Travis, do you a typical scenario would be then that there’s usually a tribe leader, right? There’s always a chief and it would be somebody who has an idea they wanna invest in, but they wanna bring some friends along.

And so that tribe forms around. A person’s idea and a person’s thrust or is it more like people just go to, say, Hey, I wanna find some like-minded people and invest with them. And I had no idea what we’ll invest in, but some alpha dog will rise up among the group and take the lead. How does that all work?

Like who’s making the decisions of what to invest in and who’s running the show for that. Try I, how does that work? Yeah, Jim. Great question. And. That’s one of the great things about Trives is everybody comes with a different application. So all those scenarios are, we see them on the Trives platform.

Some great examples are like my brothers and I, we didn’t have a deal. We just knew that if we were gonna get into deals, we were gonna have to pull capital. So that’s where we started. And we had that and and that’s what we did and what was cool about that.

We were never an invest. We had never invested, and we had no idea where these deals were. So it wasn’t until we had capital and we were out there networking. And we said, look, we have we have an investor group and we have capital and we’re out there looking for these deal. We got some drag powder.

We gotta go find something to shoot now. And then it’s all of a sudden the universe just activates. And all of a sudden at the party that I, would’ve never known, they were deals being networked towards all of a sudden, just by saying that, Hey, I am an investor and I do have capital that we, we are that we can invest all of a sudden do deals, start to present themselves.

But that’s one example. And then, I love left field investors. It’s a great example of a community that’s leaning in. They’re all there for the same reasons, they all wanna passively invest and they wanna do it with the right group that they’re comfortable with. And that’s when tribes like that come together they might have never met each other, but they met each other through the community.

They liked the same deal.  and that’s where they’re, they’re forming tribes so that they can get in on a $50,000 threshold or like sometimes there’s preferred deals, depending on the threshold you get over. So if you invest a million or 5 million let’s get in on that preferred deal together as an entity.

And that’s another cool application that we’re. So you could have a group that say they wanted to do impact investing. They wanted to revitalize inner cities or some other and a pretty large group could form around that sort of a mission statement as investors. And then within the group, they could figure out how do we curate those opportunities and that sort of thing.

Yeah. It’s all about how do you align. And so a deal is a great way to align, right? Hey, we all love this deal. Let’s form a tribe and do it together. It’s like the most, least margin of error there. Like we’re all saying, yes, let’s do this. And then you’re right, Jim. It’s what else brings us together?

What else aligns if we don’t have a deal right now, but are we aligned enough to form our tribe whole capital and invest in a certain investment type, a certain area, a certain community. And if we’re all passionate about whatever that is, that’s another great reason to form a tribe and. Capital ready so you can strike.

Yeah. One of the things I was gonna go back to the earlier point you made, some of the reasons I love this concept is, a few reasons, but one is diversification. We talk about that on the podcast a lot. And to your point, if the minimum to get into, fund one is 50, a hundred thousand dollars, you don’t have that much, or you do have that much, but it’s all you have to invest.

You can spread out your risk across maybe five different funds as they roll. The other one is another great point where a lot of these sponsors and we’re doing it ourselves where we’ll have different share classes. And at higher minimum investments, you get better economics, you get better return profile, and it’s beneficial to the sponsors because they can raise more capital faster and it’s beneficial to the investors that can write a bigger. To get some better economics, but if you can form a tribe, maybe go to a higher share class or a higher minimum required there, then you can basically get the benefit of that.

Even if you have 50, but maybe the next level’s two 50 or something, or 500, you can get a folks together to get to that level. You’re gonna do perform better in that deal. So I love that. I’d love to talk a little bit about, my, my first thoughts of this are, how do you.

It’s great grading concept. Great. In theory, but there’s also some potential pitfalls, right? With if you have too many people in a tribe, what, how do you find the ideal number of tribe members and where do you find them and how do you make decisions? Because as you, you’re investing through an entity, you have to have an operating agreement for that entity.

And there has to be a decision making process for, whether it’s unanimous consent or majority consent or whatever you decide. Talk through some of tho those kind of more practical matters of this is great. A concept, it’s, it makes a lot of sense, but how do you prevent some of the maybe pitfalls of disagreement amongst members or things like that?

100%. And we’ve been told most of us, to not do business with friends and family. And there’s truth in everything. So there’s we’ve been told that for a reason. However you ask, wealthy and the families out there that are investing together, they would say, do invest, invest with, or do business with people, and trust.

So what gives right. It’s true. Don’t do business with PE with your friends and family the wrong way. And that’s what most people do when they come together. They don’t know how to go about forming an investor group and setting it up the right way upfront. And that’s what Tribevest represents. It’s a neutral third party platform.

That provides these best practices in a really streamlined way to make sure that you are setting it up the right way, right? Making sure you are aligned. And when you come in and before you actually formally join, you see the rules of the tribe and how we’re gonna operate. And those rules aren’t, it’s not any magic.

There’s best practices out there that have been around forever in terms of how you operate as a tribe. And all those things, how we come to decisions what’s dissolution look like how are we gonna exit all those things, but everybody’s seeing them up front so that when those things come up and they will there’s, it’s not emotional.

It’s how did we agree? We were gonna do this. And that’s exactly how we’re operating and then we make, we take it one step further in that, all those things that you guys have agreed on as a group now are embedded into the dashboard. So your cap table rules, how you make decisions. So when you vote, that is built into your configuration of your D.

So anyway, it’s really about, setting it up the right way up front. We joke about how more important than the rules or the rules upfront. Cuz a lot of tribes get caught up on how are we gonna handle this? How are we gonna handle that? And getting everything just right.

Which is okay, you wanna get as much figured out as you want as you can. But as long as you can agree on these things, You’ll figure it out. You’ll figure out but having being agreed upon and aligned upfront is really the key. And then the ongoing transparency and accountability. So everything is transparent.

Every document, every transaction every your bank account, your balance, your portfolio, all that is right there. So you. You assume you’re doing business with good people, which you need to be doing, and you need to make sure that you’re doing that. But if there was ever like a temptation from a good person to do something dumb, they’re not going to because it’s all right there in the open, there’s no to hide. There’s no um, tricks to be play. Again, that’s not like a theme that we’re playing against here because people that are coming together. Have some shared background and, aren’t doing those things, but the extra transparency and accountability just absolutely ensures it.

Yeah. I love that. So it sounds to me like the two big things to prevent, disagreements down the road, or it’s just down the road is, one start with the end in mind, think through, what, where does this ultimately end up? What happens if we get into a disagreement, how do we solve.

Those potential challenges and then two being very transparent with the reporting and with the funds that are coming in and doing it out in the open. And it sounds like your platform facilitates that kind of transparency and openness as well as helping to line up front. So talk a little bit about, practically walk us through what does a platform look like?

Someone that maybe is not very technical or is near to this space is thinking, oh my gosh, I gotta set an entity. I gotta have an operating agreement. I gotta. All these things figured out. It honestly sounds a little daunting. So how do you make this easy for the non-technical folks and that’s who we’ve built it for?

I think again, the idea of group investing’s been around for a long time, but the fact that it is antiquated and it is a lot, it is you’re absolutely right. But Tribevest does streamline it. So that founder, that initiator comes. Fills in a really in a survey kind of way.

What’s your name? What’s the mission? How many members, what are your goals? And what you’re doing unknowingly is you’re populating a plan. We call it the same page, and now you have something that you can share with your potential members to initiate like, Hey, is this something that we’re interested.

And this is all before you buy and then you go in and you buy. And it’s a simple transaction with your credit card and you won’t believe this, but it’s only $348 a year to do this. So $29 a month, or if you buy it up front or $39 a month, if you do it months to month so it’s a super low cost.

And now you’re greeted with an onboarding specialist and that onboarding specialist confirms your goals. What, what’s your timelines, how many members, and they’re there to help answer any questions that you have help you onboard your members. And so you have an onboarding specialist, but you don’t really need an onboarding specialist because you can do this all on the platform.

You you file your LLC. We do that. We’re integrated with 50 secretariat states out there. We, we file that for you. And you have your articles organization, you get your EIN, your tax ID, right? From the federal government, now you have everything you need to apply for a bank account, an F D I C and bank account.

You don’t even have to do that. We’ve already done it for you. So within minutes of getting your articles organization back from the state, you’ve already opened up an F D I C insured business bank account, and you’re ready to transact. All those things are, laid out for you, really the heaviest lift, which again, we streamline is, how ready are your members?

Because now you’ve added them. You’ve invited. Do they come in and register and onboard themselves. And sometimes that takes a phone call or a poke to make sure that, people are coming to law. So Travis, backing up to that, just to the bank account piece, for instance, would it typically, so would the lead per would there be a lead person?

In the group that was gonna be the signatory on the bank account. Obviously you’re not gonna have 50 people signing on the bank account. Is that something that they all like the process will walk them through? Who’s going to be the person who writes the checks and all that, is that all that has to be done, obviously before you open the bank account, does you have to have someone sign it? And Jim, great call. Yes. And as part of that, agreeing on everything. It’s who is gonna be the banking treasury admin. Okay. So that’s all done ahead. Okay. And yeah, absolutely. And that, that you’re figuring that out and you’re agreeing on it up front and and then they do have those banking admins, so they can wire that money on behalf.

So then another sort of related question.  So you have the, so the tribe has a bank account and I there’s an LLC that an LLC looks like I’m looking at your website. That’s the structure. So they have an E IM. So the, each tribe member is gonna get a K-1 from that LLC every year. But the tribe, the LLC itself may be investing in 50 different, vehicles out there.

So the tribe is gonna get 50 K-1s. Flowing into it. Is that correct? Yeah, Jim again great call out and absolutely that’s part of it. If we’re invested in a real estate syndicate deal, passively, of course, that tribe will get the K one. And then that tribe is responsible for distributing the K one S now to each member.

And Tribevest helps with that. And we’re really excited about the advancements that we’re making before we used to bundle it up real nice in terms of your accounting and bookkeeping, so that you could hand it to your tax  CPA to do those for you.  This year we’re actually automating that and streamlining that on behalf of the tribe, so yet to come, but that’s just another way that we’re really making this easy.

And, helping that tribe distribute those K one S to each individual member. And you think about it, it’s nice. If you do have say 10 deals that you’re doing as a tribe. Each member’s only gonna get one K one, which is cool. Yeah. Very interesting. So to clarify you, you are going to be facilitating.

So you’re gathering the K ones from the individual investments of the tribe. You will have an on staff accountant that will actually run those K ones through and create K one S for the individual members of that entity, or explain that cause that’s a pretty powerful tool. We are.

Committed and in the process of delivering that solution in Q3. So in the next 90 days we’ll, you’ll we’ll know exactly what that looks like, but to your point, it probably will involve a CPA that’s in the loop. And whether it’s someone that’s on our staff or someone that we’re working with in terms of a service provider, Again, the main thing is, are we streamlining this for that tribe and those tribe members?

And and we’re just excited about that, cuz you’re right. It is a big piece of this. And and again, we were helping before, but now we really wanna solve that thing and that’s we are committing to passive investor tribes. And we’re interviewing our friends at, at left field investors and we’re asking them, what is, what is the biggest pain?

What is the biggest challenge for you? And we’re solving those things. One of them, Ben and Jim is, getting, being able to do display and have the quarterly reports and statements. In their tribe dashboard. So there’s a good chance we’ll be talking to you or your portal technology partner and figuring out ways to make that really easy.

So again, we can even have more transparency. They don’t have to forward that out to the whole tribe, but it just automatically gets uploaded. Those are the cool things that we’re working on actively. Then as far as the, the tribes investment decisions, are, do you provide any guidance to them?

I could envision, an engineer Hey, I’m gonna get some of my engineering buddies and we’re gonna, we got some pretty good money saved up. We’re gonna pull together and we’re gonna, we’re gonna start investing in real estate deals. And they may not know about 5 0 6 BS versus 5 0 6 CS versus Redgate.

Plus.  And so we as investment providers and sponsors, we’re very aware of that. And so we’ll tell people right at the gate, like if you’re not an accredited investor and in this case, if you’re not a tribe where every, I think Ben correct me if I’m wrong, but every tribe member we have to verify and do they come in, usually with some working knowledge and understanding of what they can and can’t go after, or do you guys provide that or educate them?

Or how does that work? I would say most of them do come. Pretty informed and educated on it. And again, a lot of our passive investors are coming from communities like left field investing. So they’re pretty alert to that. But again, looking at our technology roadmap here one of the things that is on that list is accreditation certification.

So making it really easy for the sponsor. To not have to go through that process, but if we can come with the tribe, all of its members showing that they are accredited it just streamlines the transaction even more. That’s great. That’s super smart. Yeah. I love it. Yeah. And again, we’re not there yet, but this is again, I think what’s so exciting about where Trives is right now.

We. A very proven broad utility it, but it’s very much the lowest common denominators of everything you would need to form an investor group, right? The LLC, the operating agreement, the bank account, make it easy to contribute capital, managing the cap table, the different business ledger, every group investing entity needs that.

But now we’re really focusing in on this. Passive investor in real estate syndication. And that’s just an example that making sure that they’re, verifying that they’re all accredited how much that speeds everything’s up and makes them a more qualified investor a serious investor in the sponsor’s eyes as well.

So that’s, what’s exciting right now. We’re going deep and like downstream or upstream, I guess is another way to look at. For this particular application of investor. Yeah. Very cool. So do you find for most of the tribes in the platform right now, are they designed and created around a single investment that these, people in the tribe all or is it for setting up a tribe for a multi investment kind of tribe?

Cause it, to me, it seems the biggest downside of it, you. A part owner in 80 different syndications, you have 5,000, 10,000 each one. You’re gonna get 80 K-1s that’s a lot to manage personally, but if you have a larger investment in one tribe that then goes and invests in those, 50 syndications or whatever the tax reporting is done at the entity level.

And you only get a single K-1. So talk to me about what’s the, what are you seeing mostly for the utility on the platform at this. Both. We have tribes that are, one to one, so one tribe equals one deal and, we’ve made it so inexpensive and easy that’s a real option now.

And those are great tribes. And then we do see quite a bit of these tribes that are coming together. With the purpose of doing these multiple deals together, Hey, we’re already investing in all these deals. We already are, of like-mindedness in terms of what we’re gonna invest.

And we of have the we found that we have a similar strategy in cadence to our investing, and we’re just gonna keep doing this again. And again I hate talking about the roadmap here, but it’s so exciting again, especially in this industry, in this vertical. But one of the things that we’re really looking at is our series LLCs.

So I’m not sure if you’re familiar with those, it’s a relatively newer thing. And it’s really exciting because it gives a tribe, the ability to have an umbrella LLC, and then they can do individual deals underneath that with the series LLCs. And there’s no extra costs. You still only have to file once.

There’s still only one K one going out to all its members and it’s a game changer. It’s a game changer. But those are the things that Tribevest are out there, on the front end of that. We’re really excited about. That’s awesome. My, this question’s been burning in my mind since the beginning, but what’s the largest tribe you guys have on the platform right now?

So we have, yeah, we have a tribe that’s over 60 members and that’s really big. That’s really big. And we don’t advise that like our sweet spot for a tribe is, four to 15, four to 15. And if we really hone in on a sweet spot, it’s that set seven. It’s the similar rules of a dinner party.

If you’re at a dinner party and you have more than seven members, not everybody can participate in the same conversation. So the same laws apply. You start to get over 15 and it’s just, we’re not built for that. And it just changes the application a little bit. But we do have tribes that are pulling 5 million together, which is another way of measuring, what size tribe do you have?

And those are some of the exciting ones that are again, getting in on these thresholds that are exclusive to people that can write those types of checks. Very cool. So you guys have looked like you’ve raised an initial seed round as Tribevest, and it sounds like you’re about to go raise another round of financing and talk about what’s kinda the long term vision.

I You guys are just getting, going, but have some amazing traction so far and sounds like some pretty big vision to shift. Democratization of these types of investments, if you will. Yeah. Absolutely. And I don’t know when this will be released but there’s, there is a chance by the, when someone hears this that we’ll still be doing our crowd round, we called a community round.

And what happened was our customers that were using us for essence. Can we invest in Trivest? And so we pulled them and they, there was a lot of them that said they wanted to invest. So it was a good kind of savvy business move for us to go ahead and create a crowd ground and make it really easy for our customers to invest in us.

And then we are reserving a little bit for the public, and that would be a marketing kind of opportunity for us to introduce Trivest to investors that are out there looking for alternative investments. To hear about Tribevest and even invest in Tribevest. So exciting things there. And, but as far as, what’s our vision, Jim and Ben, you think about it, it’s just a numbers game in a lot of ways, meaning yeah, we are better together.

And there’s this idea of if you wanted to go fast, go alone. If you wanna go far go together. And so we see a future that if there’s a platform out there that makes it easy and safe and transparent to collaboratively, invest like this, that everybody will do it. And we’re gonna be the platform that that everybody goes to, to come together and do group investing so they can do more together.

They can do more. They can do faster together and we won’t stop until until it is commonplace and we’re well on our way. That’s awesome. So the big question is will you allow investors to form a tribe to invest in Tribevest? 100%. There you go. Okay. Yeah. 100%, are some of our prior rounds, a lot of our tribe, a lot of our investors were tribes using the platform to invest.

And it’s funny. Yeah, I just saw someone that was reserving something on our, we fund round. They forwarded us their dashboard, which they have five five members.  and we, so we give you a place to vote and tally that vote, and it says, should we invest in Trivest, round question mark and all five people said yes, $25,000.

So absolutely very cool. Very cool. Travis, what’s the best way for someone that’s, intrigued wants to learn more. And see if this might be something that’s, worthwhile for them to look into, what’s the best way to get a hold of your team or reach out. Yeah. So come to Tribevest.com and click get started and and, get, start to go down the path again, quite a bit of it you can do for free.

And then we also are offering a 14 day free trial. So just a great way to go in and get familiar with the the platform and the way you can get ahold of me is find me and follow me on LinkedIn. It’s by far my most active social media platform out there. And you can just put in the search, Tribevest and Travis Smith.

And you’ll be able to follow me. And also we’ll share this with you so you guys can share it in the show notes. But yeah those are two great ways to get a hold of me. Awesome. Travis, this has been very helpful, very cool technology you’re building and excited to see where you guys go from here.

Thanks, Ben, Jim really enjoyed it. Thanks for having me.