How Much Should I Pay a Capital Raiser?

What’s up everyone!? Let’s look over some strategies that can answer this question!

First, let’s go over the three main positions, or “circles” of a fund:

  • Investor Expert (geek that does the helpful math all day)
  • Fund Manager (main man that does the auditing, accounting, etc.)
  • Capital Raiser (natural-born salesperson)

Every fund needs to have these 3 things, whether the job is done by 1, 3, or 20 people.

But back to the question, “How much do I pay my capital raiser?”

Keeping in mind that every business is different, I said in my video that…

“Typically, a third of the equity goes to the Investor Expert, a third to the Fund Manager, and a third to the Capital Raiser.”

I asked some capital raisers what they like to see, so here’s some strategies that we’ve come up with…

Strategy #1

Let’s say a capital raiser says he can make you $50M.

After you’ve vetted them, give them a percentage of the fund on day 1. Then, let’s say you give them 12 months to make $50M, with benchmarks to reach that goal.

That way, you can both can track their progress. Your capital raiser should agree to the deal, not wanting to hurt their ego.

Strategy #2

Now, let’s say we have a fund of 14 people. You would all agree on how to split up the responsibilities and ownership of the fund between the individuals.

After a period of, let’s say 12 months, each member would vote on how well each other member fulfilled their obligations.

If a certain member were voted as not having fulfilled their role, they would lose half of their promised equity.

This keeps all the members accountable.

Strategy #3

Lastly, you could simply hire…

  • Broker Dealers
  • I.A. or R.IA.
  • Placement Agents

These are professional money raisers that work for a fee or commission

Unfortunately, on a first-time fund, most of these guys won’t accept you.

However, if you can get one of them to work for you, it will cost you anywhere from to 2% to 10% of capital raised. That’s pretty pricy, unless you are really profitable!

Good luck on getting that capital raised! Check out my video for other tips on how to start a fund from scratch!

See you soon,

Bridger Pennington

Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!

DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.

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