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

This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and and interview successful investors. 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. And it's really, really cool. So Travis, thanks for coming on 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 you and it's kind of a cool story of how you started TribeVest and really what you're doing for investors through the platform.

So TribeVest makes it so we can level up and team up with those that we know, like, 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, uh, so you can come together, pull your capital, uh, and, and, and transact as an entity and then giving you all the, the transparency and dashboard for everybody to see everything they want to see, transactions, documents, uh, cap table, everything. So, um, that's, that's what we do in a real nutshell. Uh, in terms of how, how, where'd this come from? Uh, well, we'll have to go back 13 years ago when my brothers and I were on a fishing trip that we couldn't afford. Uh, we were, uh, you know, fresh out of school, uh, had good jobs, good incomes, but we, we knew that we had to figure something out more than our incomes, our 401s, and this idea of just retiring at 65 wasn't going to 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 know, 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 because it's a pretty simple concept, but pretty powerful, especially for those like you were when you were just starting out, kind of just dipping the toe and getting familiar and investing in these types of opportunities, but not having to come up with a really big lump sum, right? So, so the, 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 you know, $50,000 and above. But if you get, you know, 5 friends and you each put $10,000 into it, you can invest through that 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 as a platform provide the services to help facilitate those kind of what you call tribes. Is that accurate?

Yeah. I mean, well said. Well said. Yes. And we, you know, we didn't invent this by any means. People have been doing this forever. But, you know, 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, but somebody has the burden of pulling it all together. Right. And we call that person the founder of the tribe. And without Tribe Best, it's just, it's more trouble than it's worth, I guess, is one way to put it. But with Tribe Best, 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. Yeah, passive investing in real estate is a huge vertical for us. It's a lot of our customers are doing exactly that. And I don't care who you are, like writing a $50,000 check, $100,000 check, it's hard. And, and what this does is it gives you the ability to invest in more deals, right? So you just don't have to say no to deals. You say yes to the ones you like and you participate in, you know, and, you know, sponsors, not every deal is a home run, right? But sponsors do have a proven track record. So can I invest in every deal? For example, versus maybe every 5th 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, right, is, you know, as a private or a passive investor, we say passive, but they're pretty active. Like they want to get to know the, they want to get to know the sponsor. Rightfully so. So there's a lot of active due diligence that goes on up front. And when I have a tribe of 5 and they've talked to Ben and Jim and done a couple of deals with, with, with you, you know, with you, for example, that trust transfers, right? It transfers. And all of a sudden I can not— I cannot have— I don't have to invest invest, you know, hours and hours calling, you know, thinking about this on my own. The fact that I know my buddy Sue has already worked with, with you guys is enough that I can shortcut right to it. Do I like the deal? Let's go.

Travis, do you, you know, a typical scenario would be then that you know, there's usually a tribe leader, right? There's always a chief and it would be somebody who has an idea they want to invest in, but they want to 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 you, you know, say, hey, I want to find some like-minded people and invest with them. And I have no idea what we'll invest in, but some alpha dog will rise up among the group and and take the lead? How does that all work? Like who's making the decisions of what to invest in and who's kind of running the show for that tribe? How does that work?

Yeah, Jim, great, great question. And, you know, that's one of the great things about TribeVest is everybody kind of comes with a different application. So all those scenarios are, we see them on, on the TribeVest platform. You know, some great examples are Um, like my brothers and I, you know, we didn't have a deal. We just knew that if we were going to get into deals, we were going to have to pull capital. So that's where we started. And we had that like-mindedness and, um, and that's what we did. And what was cool about that, we were never an investor. 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, uh, we have, uh, an investor group and we have capital and we're out there looking for these deals.

We got some dry powder. We got to go find something to shoot now.

Right. And then it's like all of a sudden the universe just activates. Right. And all of a sudden, like, well, at the, at the party that I would have never known there 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, you know, we are, that we can invest, all of a sudden deals start to present themselves. So, but that's one example. And then, you know, 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, right? They all want to passively invest and they want to do it with the right group that they're comfortable with. And that's when tribes like that come together. They might've never met each other, but they met each other through the community. They like the same deal. And that's where they're, you know, they're forming tribes so that they can get in on a $50,000 threshold. Or like sometimes there's preferred deals, you know, depending on the threshold you get over. So if you invest a million or $5 million, Well, let's get in on that preferred deal together as an entity. And that's another cool application that we're seeing.

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

Yeah. You know, it's, it's all about how do you align? And, 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, you know, least margin of error there. Like we're all saying, yes, let's do this. And then you're right, Jim. It's like, well, what, what else, 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, our, our tribe, pool 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 have capital ready so you can strike.

Yeah. One of the things I was going to go back to the earlier point you made, you know, some of the reasons I love this concept is you know, a few reasons, but one is diversification. We talk about that on the podcast a lot. And to your point, you know, if the minimum to get into, you know, Fund 1 is $50,000 or $100,000, you don't have that much, or you do have that much, but that's all you have to invest. You know, you can spread out your risk across maybe 5 different funds as they kind of roll on. And then 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, right? 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 check to get some better economics. But if you can form a tribe, maybe go to a higher share class or higher minimum required there, then you can basically get the benefit of that even if you have $50,000, but maybe the next level is $250,000 or something, or $500,000. You can get folks together to get to that level, you're going to perform better in that deal. So I love that. I'd love to talk a little bit about, you know, my first thoughts of this are, you know, how do you, you know, it's great in concept, great in theory, but there's also some potential pitfalls, right? With what if you have too many people in a tribe, you know, what, how do you kind of find the ideal number of tribe members and where do you find them and how do you make decisions? Because as you, If 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, you know, whether it's unanimous consent or majority consent or whatever you decide. But talk through some of the, those kind of more practical matters of this is great in concept, you know, 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 so, you know, we've been told, uh, most of us, right, to, to not do business with friends and family. And there's truth in everything. So there, there's like, we've been told that for a reason. Um, however, you ask, you know, wealthy and the families out there that are investing together, they would say, do invest, you know, invest with and do business with people, you know, like and trust. So what gives, right? Well, it's true. Don't do business with people, with your friends and family the wrong way. Right. 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 Tribest represents. It's, it's a neutral third-party platform that provides these best practices in a really streamlined way, um, to make sure that you are setting it up the right way, right? Making sure you are aligned. And when you, when you come in and before you actually formally join, you see the rules of of the tribe and how we're going to 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, you know, all those things, how we come to decisions, what's dissolution look like, how are we going to exit, all those things. But everybody's kind of 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 going to 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, You know, that, that is built into your configuration of, of your dashboard. So anyway, it's, it's really about, you know, setting it up the right way up front. I mean, we joke about how more important than the rules are the rules up front. Um, because a lot of tribes get caught up on how are we going to handle this? How are we going to handle that? And, you know, getting everything just right. Uh, which is, which is okay. You want to 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, 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, uh, every, your bank account. Your balance, your portfolio, all that is right there. So, you know, 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, right? There's, there's nowhere to hide. There's no, tricks to be played. Again, that's not like a theme that we're playing against here because people that are coming together have some shared background and, you know, 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 issues down the road is, you know, one, start with the end in mind. Think through, you know, 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. 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? You know, someone that maybe is not very technical or is kind of newer to the space is thinking, oh my gosh, I got to set up an entity, I got to have an operating agreement, I got to have all these things figured out. It honestly sounds a little daunting, right? So how do you make this easy for the non-technical folks?

And that's who we've built it for. You know, I think again, the idea of group investing has been around for a long time. But the fact that it is antiquated and it is a lot, it is, you're, you're absolutely right. Um, but Tribest does streamline it. So that founder, that initiator comes in, uh, fills in a really, really in a survey kind of way. What's your name? What's the mission? How many members? What are your goals? Um, and what you're doing kind of 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 kind of initiate like, hey, is this something that we're interested in? And this is all before you buy. And then you go in and you buy and, um, you know, it's a, 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'd buy it upfront, or $39 a month if you do it month 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, you know, 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, um, 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, you file your LLC. We do that. We're integrated with 50, uh, Secretary of States out there. We, we, we file that for you. And you have your articles of organization, you get your EIN, your tax ID, right? So, uh, from the federal government. Now you have everything you need to, um, apply for a bank account, an FDIC bank account. Well, you don't even have to do that. We've already done it for you. So within minutes of getting your articles of organization back from the state, you've already opened up an FDIC-insured business bank account. And you're ready to transact. So, you know, all those things are, you know, laid out for you. Really the heaviest lift, which again, we streamline is, you know, how ready are your members, right? Because now you've added them, you've invited them, and do they come in and register and onboard themselves? And sometimes that takes a phone call or a poke to make sure that, you know, people are coming along.

So Travis, backing up to that, you know, and just, just to the bank account piece, for instance, would it typically, you know, so would the lead per— would there be a lead person in the group that was going to be the signatory on the bank account? Obviously you're not going to 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, right? Because you have to have someone sign it.

Right. And Jim, you know, great, great call. Um, yes. And as part of that agreeing on everything, it's, um, you know, who is going to be the banking treasury admin?

Okay. So that's all done ahead. Okay.

Right. And so, um, yeah, absolutely. And that, that you're, you're kind of figuring that out and you're agreeing on it upfront. And, um, and then they do have those banking admins so they can wire that money on behalf.

So then another sort of related question is, um, so you have the, so the tribe has a bank account. There's an LLC that an LLC looks like I'm looking at your website. That's the structure. So they have an EIN. So each tribe member is going to get a K-1 from that LLC. Every year, but the tribe, the LLC itself, may be investing in 50 different, you know, vehicles out there. So, so the tribe is going to get 50 K-1s flowing into it. Is that, is that correct?

Yeah, Jim, again, great, great call out. And absolutely, that's part of it. So, you know, if we're invested in a real estate syndicate deal passively, of course, That tribe will get the K-1 and then, uh, that tribe is responsible for distributing the K-1s now to each member. And, uh, Tribe Best helps with that. So, and we're, we're really excited about kind of the advancements that we're making. Before we used to kind of bundle it up real nice, uh, in terms of your accounting and bookkeeping. So that you could hand it to your tax, you know, CPA to do those for you. But, you know, 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, you know, helping that tribe distribute those K-1s to each individual member. And you think about it, it's kind of nice if you do have, say, 10 deals that you're doing as a tribe, each member's only going to get one K-1, which is cool.

Yeah, very interesting. So, so to clarify, you, you are going to be facilitating, so you're gathering the K-1s from the individual investments of the tribe. You, you will have an on-staff accountant that will actually run those K-1s through, um, and create K-1s for the individual members of that entity, or explain that. 'Cause that's, 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, um, 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. But again, the main thing is, is are we streamlining this for that tribe and those tribe members? And we're just excited about that because you're right, it is a big piece of this. And again, we were helping before. But now we really want to solve that thing. And that's like, we are committing to passive investor tribes and we're interviewing our friends at, you know, at Left Field Investors. And we're asking them, you know, what is, you know, what is the biggest pain? What is the biggest challenge for you? And we're solving those things. You know, one of them, Ben and Jim, is you know, getting, being able to do display and, you know, have the quarterly reports and statements in their Tribe dashboard, right? So there's a good chance we'll be talking to you or your portal, you know, 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 kind of the cool things that we're working on actively, right?

And then as far as the, you know, the tribes' investment decisions, you know, do you provide any guidance to them like that? You know, I could envision, you know, an engineer like, hey, I'm going to get some of my engineering buddies and we're going to— we got some pretty good money saved up. We're going to pull it together. And we're going to, we're going to start investing in real estate deals and they may not know about 506Bs versus 506Cs versus Reg A+. 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 in, you know, 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, you know, showing that they are accredited, it just streamlines the transaction even more.

That's, that's great. That's, 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 Tribest is right now, we've built a very proven broad utility, but it's very much the lowest common denominator of everything you would need to form an investor group, right? The LLC, the operating agreement, the bank account, making it easy to contribute capital. Managing the cap table, the different business ledger, you know, every group investing entity needs that, right? So, but now we're really focusing in on this passive investor in, in real estate syndication. And that's just an example that making sure that they're, you know, verifying that they're all accredited, how much that speeds everything up and makes them a more qualified investor. 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 it for this particular application of investor.

Yeah, very cool. So do you find for most of the tribes on the platform right now, are they designed and created around a single investment that these, you know, people in the tribe all like, or is it for setting up a tribe for a multi-investment kind of tribe? Because to me it seems like, you know, the biggest downside of if you are, you know, a part owner in 80 different syndications, you have $5,000, $10,000 each one, you're going to get 80 K-1s, right? That's a lot to manage personally. But if you have, you know, a larger investment in one tribe that then goes and invests in those you know, 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 are you seeing mostly for the utility on the platform at this point?

You know, both. Both. So, you know, we have tribes that are, you know, one-to-one. So one tribe equals one deal. And, you know, we've, We've made it so inexpensive and easy that that's a real option now. Right. And those are great tribes. And then we do see quite a bit of the, you know, 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, you know, of like-mindedness in terms of what we're going to invest in. We kind of have that. We, we found that we have a similar strategy and cadence to our investing, and we're just going to keep doing this again and again. Again, I hate talking about, you know, the roadmap here, but it's, 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-1 going out to all its members. And it's a game changer. It's a game changer. Uh, but those are the things that Tribe Best are out there, you know, 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, 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. Um, and we don't advise that, like our sweet spot for a tribe is, you know, 4 to 15, 4 to 15. And if we really hone in on a sweet spot, it's like that set 7. It's kind of the similar rules of a dinner party. You know, if you're at a dinner party and you have more than 7 members, Not everybody can participate in the same conversation. So kind of the same laws apply, but, you know, 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, but we do have tribes that are pulling $5 million together, which is another way of measuring, you know, what size tribe do you have? And those are, 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 Tribest, and it sounds like you're about to go raise another round of financing. And talk about what, what's kind of the long-term vision. I mean, you guys are just getting going, but have some amazing traction so far, and sounds like some pretty big vision to kind of shift the democratization of these types of investments. If, you all.

Yeah, absolutely. And I don't know when this will be released. But there's, there is a chance by the, you know, when someone hears this, that we'll still be doing our crowd round, we call it a community round. And what happened was, our customers that were using us were asking us, can we invest in Tribest? 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 CrowdGround 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 Tribest to investors that are out there looking for alternative investments. to, you know, hear about Tribest and even the best in Tribest. Uh, so exciting things there. And, but as far as, you know, what's our vision, you know, Jim and Ben, you think about it, you know, it's just a numbers game in a lot of ways, meaning, yeah, we are better together. And, um, you know, there's this idea of if, if you wanted to go If you want to 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 going to be the platform 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%. Yeah. Okay. Yeah, 100%. You know, our, our, 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. Uh, yeah, I just saw someone that was reserving something on our WeFunder round. They forwarded us their dashboard, which they have 5, uh, 5 members of. And so we, we give you a place to vote and tally that vote. And it says, should we invest in TribeVest? You know, round question mark. And all 5 people said yes, $25,000. So absolutely.

Very cool. Very cool. Well, Travis, what's the best way for someone that's, you know, intrigued, wants to learn more and, uh, you know, see if this might be something that's, you know, worthwhile for them to look into. What's the best way to get ahold of, of, uh, your team or reach out?

Yeah. So come to tribevest.com, um, and, you know, click get started and, um, and, you know, start to go down the path again, quite a bit of it you can do for free. Um, and then we also are offering a 14-day free trial. So just a great way to kind of go in and get familiar with the, uh, the, the, the platform. Uh, and the way you can get ahold of me is find me and follow me on LinkedIn. It's by far my most active, uh, social media platform out there. And you can just kind of put in the search Tribest and Travis Smith, and, uh, 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. Uh, but yeah, so, uh, those are two great ways to get ahold of me.

Awesome. Well, Travis, this has been very helpful. Very, very cool technology you're building. And, you know, excited to see where you guys go from here.

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