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