I am at a HF, but we also have a large growth equity arm. I am able to invest in all of our GE/VC investments.
The way it works at least for me is that the year is split into 6 month cycles. If you opt in for a cycle, you have to invest in every deal that we do - you cannot cherry pick. Obviously as rank goes up your limit on each investment increases.
For argument sakes let’s say my max is 5000 for each GE deal and 2500 for each VC deal. If we end up doing 20-30 deals that’s a lot of dough I’m obligated to dish.
My two options are I can invest at a lower level (aka 1000 each GE deal 500 each VC deal), or 2, take out a line of credit that I could use to fund these deals. For those of you taking out lines of credit - who are your go to lenders? (I know there’s a few that specialize in this)
What do y’all think and what is your experience with co-investing and such. I see what our deals on the private side make and it’s crazy. You can easily put a 5K check down and get a 10x return without it being an anomaly.
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Hope that helps.
Interesting way to build alignment but kinda scary that you don't get to pick the deals because what if the split on VC and GE is not what you exoected for the 6 months you commit? I wouldn't borrow if I were you because I'd only think about financing if I know the pipeline.
Agree that I would prefer to be able to selectively choose, but this is a top, top shop with amazing returns. The RR is so heavily skewed towards me. Don’t have to pay any management fees etc either.
I am also responsible for pro rats share of follow ons as well. I’ll just have to find my sweet spot of what works with my current pay level. Great way to get exposure to private markets and share in the upside, which very few are able to do. I am also able to invest as much as I want in the HF I work on.
Sounds like you have high conviction so go for it! Can't recommend on the line of credit but I'm guessing your investment horizon is gonna be pretty long even without the risk of a near term recession so if you could pay it without borrowing you should try
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