When investors can compare deal structures across dozens of offerings at once, sponsors who deviate from market norms face an explanatory burden they never had before.
Before 2012, the commercial real estate syndication market operated with an information imbalance that most participants accepted as normal. Sponsors raised capital from personal contacts and negotiated deal terms within closed networks. Investors had no reliable way to know whether the preferred return or equity split they were being offered was competitive, generous, or exploitative. According to Adam Gower, founder of GowerCrowd, the JOBS Act did not just open access to capital. It eliminated the information gap that had given sponsors wide latitude in structuring investor returns.
“Before the JOBS Act, this industry operated in silos,” Gower says. “Both sponsors and investors lived in these self-contained little worlds where they knew everybody.”
Capital Raising Before 2012
Gower describes a pre-2012 fundraising world in which sponsors built investor networks through personal relationships, often in social settings such as country clubs. Proximity and trust substituted for market transparency. If a sponsor offered below-market terms, the investor had no easy way to know. Deals were evaluated in isolation: against the sponsor’s reputation and the investor’s personal judgment, not against a visible landscape of competing offerings.
This arrangement was not necessarily corrupt, but it was opaque in ways that benefited sponsors. Without a clearing mechanism for deal terms, “standard” was whatever the person across the table said it was. Investors who lacked access to multiple deals at once had no basis for comparison.
That changed when general solicitation became legal. For the first time, sponsors could publicly advertise their offerings, and investors could evaluate multiple deals side by side. This created a de facto market for deal structure transparency that had never existed before. Gower points to a white paper he co-authored with what is now RealPage, analyzing tens of billions of dollars in investment data, as one of the first systematic efforts to document market-standard deal structures. That kind of analysis was only possible because the data had become visible.
When Sponsors Deviate From Norms
Sponsors who offer non-standard terms now face a new kind of friction with investors. Unusual terms do not automatically disqualify a deal. Gower notes that investors may still commit even when terms differ from market norms. But the deviation now demands an explanation that sponsors previously did not have to provide.
Gower describes this as adding “a layer of struggle” to sponsor presentations. In a market where investors are already more skeptical, due to deal failures from inexperienced operators and broader economic uncertainty, defending non-standard terms is a meaningful additional obstacle. Sponsors who might once have quietly offered a lower preferred return or a less favorable equity split can no longer do so without investors noticing.
“When you offer something that does not conform with market standards, investors wonder why,” Gower says.
Sponsors with strong track records and competitive terms now have a clearer path to standing out. When investors compare offerings, sponsors who demonstrate market-standard or better terms alongside a credible track record hold a structural advantage they did not have when the market was opaque.
Pressure to Conform or Explain
The information gap that once defined private real estate capital raising is unlikely to return. As more sponsors move online and more investors gain experience comparing offerings, the pressure to conform to market norms, or clearly justify departures from them, will only grow.
Investors today are also more skeptical for a second reason. Following the JOBS Act, a generation of inexperienced sponsors entered the market, using digital marketing to raise capital for deals that carried significant risk. When interest rates rose, many of those deals failed. The investors who lost money are now the same pool that experienced, established sponsors are trying to attract — and they are approaching new offerings with far more caution than the first generation did.
Pre-2012 habits are becoming a liability. The market now rewards clarity, and sponsors who have not adjusted their approach to deal structuring and investor communication are increasingly at a disadvantage. The sponsors building the most durable investor relationships are those who recognize that earliest.
