Comments (21)

Jan 24, 2022 - 12:20pm
spawn, what's your opinion? Comment below:

How many years of non-internship work experience do you have? First time funds which are founded by people without a real anchor LP usually don't end up with the best fundraise results.

Jan 24, 2022 - 3:58pm
franco, what's your opinion? Comment below:

First time funds should be a core offering for most placement agents. You would most likely want a placement agent that has strong connections with HNW and possibly family offices provided you have some type of investment track record.

Unless you are partnering with an industry veteran, the fund you are contemplating will most likely be too early for instos.

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Jan 24, 2022 - 5:02pm
account8675309, what's your opinion? Comment below:

Going to give some real advice, because I respect the hustle and I also came from an alternative background. Quick housekeeping point, I highly recommend posting under a pseudonym, up to you obviously but it's a small world. 

First, the bad. Less than a year of analyst-level DCM experience isn't going to garner any favor from institutional placement agents… I doubt you'd even get a local boutique shop to take on the engagement, and if they did I would recommend you find someone else to work with. You also posted in the last week about learning modeling for distressed real estate, so I'm pretty skeptical you're in a place (today) to manage your own money, let alone someone else's. The easiest way to what you want to do is going to be working at an established distressed real estate fund, but I'm guessing that's not your vibe for one reason or another.

That said, it's never too late to start on an entrepreneurial path. Real estate is home to many, many success stories from people in all walks of life - not nearly as Ivy League focused as Wall Street (although slowly growing that way in commercial as the field matures). 

For the time being, completely forget about starting a fund and focus on learning how to do a deal. I highly recommend starting with small-time residential stuff, because it's very open to hustlers with limited or less relevant experience. Read as much as you can, listen to the BiggerPockets podcast, and start joining networking groups. Ask lots of questions, and find someone with some experience to mentor you. Ask to help, and be open to grunt work - manual labor, dialing for dollars, whatever.

Learn the basics of real estate - what makes a deal attractive, why some properties are more valuable than others, how to think about an area and a specific asset in its market context, and, especially, how financing and structuring works and the various legal components. Pick up a few textbooks, and make sure you have a deep understanding of credit metrics and capital structures.

Once you understand the basics and have made a nickel or two from your labor, start working on putting a deal together and pitch people on it (banks, local investors from your meetups, etc. Don't get ahead of yourself). Put a few dollars in, but finance mostly with investor equity and pay yourself with upside promote (no one wants to pay fixed fees on your first deal or two). Do that a few times, and make money on them (if you can't make money, what are you doing trying to raise capital). 

Once people have made money with you, they will be glad to give you more. If you understand the core points of stabilized real estate and the legal intricacies of financing, you can pivot into note and tax lien investing - now you're getting into the sexy stuff. Riskier deals, shittier properties, dangerous tenants, potentially high returns - the good stuff. Keep investing with friends and family and local HNW investors, and build a reputation for being good at these distressed notes. 

Now you have a reputation, a network, a track record, and a starting LP base - boom, time to fundraise. This assumes starting from scratch, so feel free to skip any interim steps you've already done, but the key point remains - you need experience running deals to fundraise

Jan 24, 2022 - 5:33pm
spawn, what's your opinion? Comment below:

The above comment is solid advice. There are people with 15+ years of really solid experience that get annihilated when trying to raise money. You may be able to raise it from FFFs (friends, family, and fools) up to a really small sum (say 1m) if you really wanted to, but I would highly recommend that you just get working and learn the ropes and revisit this goal in increments of 3-5 years.

  • Principal in PE - LBOs
Jan 25, 2022 - 9:39am

You are multiple levels off the mark.

What is it exactly that you're trying to do?

Based on the above, it's sort of like a 19 year old waiter at IHOP asking now that he has the requisite experience and he's drawn up a business plan how should he open a 3 star Michelin restaurant in NYC. You're miles off the mark.

If someone asked me that, Id say you're in the right industry broadly but not at a firm/role/tenure that holds any value at present for your stated goal.

I'd use your experience to ladder your career to a real place that holds value within that trajectory and revisit what it is you're trying to accomplish. DCM is not viewed in particularly high esteem for investing, even DCM at GS or JPM are not particularly interesting in terms of where investors hire from. That should tell you something.

Being an entrepreneur in the tech start-up world at a young age is possible because experience is irrelevant, you can build a product first and a business after, some 8 year olds have software building skills, there's no barriers to entry, and you can build a business/validate it in-market first and raise money after. And even then it's EXCEEDINGLY rare.

That dynamic is not at all the case in finance/asset mgmt.

Further, the fact that you think this may be possible and you've already done the work you claim to have done to lay the foundation suggests you are meaningfully uninformed and amateurishly spending your time on a fools errand. Not at all meant to be harsh or critical. You're young and wet behind the ears. That is 100% fine and to be expected. Just trying to tell you what the reality is so you can calibrate adapt accordingly.

This is the time to submerse yourself in an experience working with as smart and credentialed people as you can muster. Hint: they're not at Deutsche Bank in M&A, much less DCM. Be an information sponge. Learn the business of investing.

Jan 25, 2022 - 10:09am
spawn, what's your opinion? Comment below:

I agree with you regarding the "wake up call" approach but perhaps you're being just a tad harsh lol. It's good to have goals but important to be realistic with what it takes to achieve those goals. That being said, I don't think it's necessary to poop all over where your experience is from but rather just get MORE experience.

  • Associate 2 in PE - Other
Jan 25, 2022 - 10:21am

You can look at the dudes LinkedIn, he needs as many wake up calls as he can get 

  • Analyst 2 in IB - Cov
Jan 25, 2022 - 10:42pm

Something about misspelling 'REIT' in the same sentence where you say how much experience you have just gets me...

  • Analyst 1 in IB-M&A
Jan 26, 2022 - 3:00am

Can't help but defend the guy.. He asked a very naive question and clearly is not at the right stage to start a fund, but you keeping his public identity revealed after he tried to hide it (he changed his username) is a pretty shitty thing to do

Couldn't you just cut out the username?

  • Prospect in IB - Gen
Jan 26, 2022 - 2:12pm

agreed. I think you should edit his username out. It was probably an honest mistake on his part. if you were on his end how would you feel if he posted your actual name if you tried covering it up  

Jan 26, 2022 - 2:44pm
spawn, what's your opinion? Comment below:

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