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…
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.
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.
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,
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.