Why Fund Managers Fail

Happy Tuesday everyone! Last day of August, means Summer is starting to wind down doesn’t it…

However, college football is right around the corner. My Cougs kick off this Saturday against Arizona, and I couldn’t be more stoked!

Alas, today we’re getting into a couple of lessons learned by me and my team over the past couple of months.

We’ve been helping literally thousands of students learn how to launch their own investment funds, and I’ve observed several unfortunate trends as to WHY some fail.

I’m going to specifically hit on THREE trends today…

Let’s get to it.

#1: General reluctance to build out a necessary team.

Community, crowd, group, market, public, society, team

Guys, it is NOT a bad thing to surround yourself with qualified people.

I’ll never forget my father telling me about the early days of his fund (now a publicly traded company that manages $25B+), and the realization that hit him.

He knew that he needed to build out a team with people who were much more qualified than him to evaluate all these potential deals, and determine which ones were the best.

He knew how to work with people, how to be compliant, and how to negotiate. He did not know how to purchase a skyscraper in Chicago.

Likewise, there will be situations where YOU as the fund manager can identify a project with potential, but perhaps you do not have the required expertise to jump on it.

That’s why you need a well rounded team, it’s is going to help you unlock the potential of your fund more than just about anything else.

Don’t be concerned potentially losing some of the pie by bringing people on.

By making the correct smart hires you’re just going to increase the size of that pie and have a plethora for all.

#2: People are more concerned about their own bottomline than their investors’ bottomline.

greed, greedy, money, stealing

I see this all too often.

Despite being in an “investment” space, folks want to run it purely like a corporation and give their backers as little as possible.

I understand the urge to act like this, I really do. You’re trying to make as much money as you can and paying investors back may seem like a massive obstacle for you in the process.

But that’s not how you should go about thinking through these things.

Pay your investors a great return and you will set up a base for a relationship that will be beneficial for you as long as you are in the fund game.

With time you’ll find those returns will start making their way into your pockets as you grow.

It’s a win-win!

#3: Setting appropriate expectations.

Aim, goals, strategy, target, vision

Lastly, we’ve got people who are looking at the starting a fund because they see the big-time players on Wall Street and think that they want that kind of success.

Which is all fine and good, and I want people to be able to reach that level as well.

However, you guys have got to be aware of the work that it is going to take to get a fund up and going.

This is NOT a get rich quick scheme over here.

You are most likely not going to be able to decide you want to launch a fund and be millionaires in three weeks.

It takes time.

Your legal work alone is going to typically going to require somewhere between 60-90 days, unless you’ve got some sort of connection you’re accustomed to working with.

Then setting up the rest of your providers is, again, going to require time.

Building up enough deals, or enough of a return on your deals, will be a process as well before you’re making what you’re aiming for.

With all that said, I’m not saying that you won’t reach incredible heights with your business, but rather that it’s going to be hard work and will come little by little.

The reward will make it all worth it.


I hope this was informative in setting some ground work for you guys with what you should expect.

I’m trying to be honest with this one that starting a fund is not for everyone.

But for those who can avoid these pitfalls, there’s not a more lucrative business around.

Best of luck,

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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