WHY to RAISE A FUND or How to Get people to Give you $$$?
I've raised for big players (Goldman, SSgA, First Trust, EEC) to the tune of literally tens of billions...
(Hand slaps face for not getting more equity)...
A thread:
I've raised for big players (Goldman, SSgA, First Trust, EEC) to the tune of literally tens of billions...
(Hand slaps face for not getting more equity)...
A thread:
At @GoldmanSachs (should I name drop again 🙄) we were shown a study on generational wealth...
Almost 100% of the wealth was made 1 of 5 ways:
Lucky Sperm Club (ok it said Inheritance)
Owner of a Business
Marry Rich
Public Co C Suite Exec
Asset Management
Almost 100% of the wealth was made 1 of 5 ways:
Lucky Sperm Club (ok it said Inheritance)
Owner of a Business
Marry Rich
Public Co C Suite Exec
Asset Management
The last one is intriguing...
Building a fund and then a fund family (a group of funds)
Building a fund and then a fund family (a group of funds)
Fund managers (PE, VC) make $ when the Cos they invest in make $.
2 revenue streams:
1. Carry: share profits realized by investors
2. Management fee: usually a 2% fee to run the fund
3. Fundraising/admin costs: aka jets, offices in Connecticut etc
2 revenue streams:
1. Carry: share profits realized by investors
2. Management fee: usually a 2% fee to run the fund
3. Fundraising/admin costs: aka jets, offices in Connecticut etc
Carry - 20% is standard
For example:
If a fund makes $10 million in profits (or returns)
The partners take a $2 million to $3 million cut before distributing the rest among their investors.
For example:
If a fund makes $10 million in profits (or returns)
The partners take a $2 million to $3 million cut before distributing the rest among their investors.
Management Fee - That fee is paid as a percentage of total fund size over the life of the fund (5-10 years)
Example in the spreadsheet for $50M fund
- $1M will be paid in each of the first five years
-next 5 years $500 paid out (½ management fee)
Example in the spreadsheet for $50M fund
- $1M will be paid in each of the first five years
-next 5 years $500 paid out (½ management fee)
Look at how the money stacks up.
Not too shabby
Now imagine you raise multiple of these funds over the course of a few years… the payouts ain’t bad.
Not too shabby
Now imagine you raise multiple of these funds over the course of a few years… the payouts ain’t bad.
But before you start putting together fund formation docs and asking your grandma if she’s an accredited investor...
GOLDEN RULE: you have to deliver.
GOLDEN RULE: you have to deliver.
It’s a hits-driven business.
You have one judge, jury, and executioner… your MOIC (Multiple on Invested Capital).
A fancy way of saying I give you $100, do you give me back $300 to $500.
If not, pick a new job.
You have one judge, jury, and executioner… your MOIC (Multiple on Invested Capital).
A fancy way of saying I give you $100, do you give me back $300 to $500.
If not, pick a new job.
Want to learn more follow these buds of mine who raised funds the unconventional way & who share:
@ShaanVP - $3.5M rolling fund
@moseskagan - MF fund In RE
@keith_wasserman - $1.5B+ fund in RE
@fortworthchris - $500M assets in RE
@ShaanVP - $3.5M rolling fund
@moseskagan - MF fund In RE
@keith_wasserman - $1.5B+ fund in RE
@fortworthchris - $500M assets in RE
This isn't an easy game.
Because you are playing a reputation game w/ OPM
You need:
Financial saavy
Access
Investment thesis
Unfair advantage (unique skill stack)
Outcomes are often outside of your control
Because you are playing a reputation game w/ OPM
You need:
Financial saavy
Access
Investment thesis
Unfair advantage (unique skill stack)
Outcomes are often outside of your control
BUT these days you don’t need to have gone to Harvard or be a billionaire to start a fund (although many have and are)
Plenty have killed it within unconventional areas, regions, and backgrounds like @BrentBeshore
Plenty have killed it within unconventional areas, regions, and backgrounds like @BrentBeshore
Weigh the risks then, hey who knows, maybe you too can be a fund manager.
If you're any good... let me know, so I can invest :)
If you're any good... let me know, so I can invest :)
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