Hello - Has anyone with co-invest opportunities at their firm ever under the radar made the opportunity known to friends/family? Can you form an LLC and raise capital into it and then contribute, or does your firm require it to be a personal contribution? I'm sure the firm has certain disclosure requirements that would prevent you from sharing details with others outside the firm/investment structure. Just thinking through the implications and don't want certain people in my life who were there financially for me to miss out on the opportunities I've been blessed with.
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Yes, I know and advise for people who do this.
Yes, just immediate family though. In today’s market you’d be hard pressed to lack capital for any type of deal our type of firms would be doing, asking for new investors to essentially jump the line for opportunities is only likely to be accommodated for very few, if at all. Most likely not out of necessity for capital.
For sure - direct family at least, not sure if your firm would be fine with you raising from your whole social network.
Pretty common to either form an LLC, or structure it as a loan to yourself which you can reinvest. I've also seen some people take AM fees on friends/family capital they're co-investing lol.
Yeah, this is hardly a new idea. Just be careful on who you take money from, how you structure, etc. This would make you very much a "promoter" and syndicator yourself, and potentially subject all the same regulation and liability. I would also be hyper transparent with your employer (and their securities counsel), since you are an employee, it could be viewed that this LLC is a direct offering and that could cause issues.
To note, people would do this and literally set up promote/fee structures for themselves (like within the FF LLC), I render no judgement, just pointing out the opportunity here if you really want to have some fun!
Just got off the phone with one of my "personal" business clients, he raised a small $10mm fund. He puts in zero equity but gets a 60% split after return of capital.
Does that include a pref return, or just return of capital? That'd be a nice payday for them.
and people complain about the hedge fund 2/20 fee model................
Bumping this thread. Seems like this is something that is done frequently and would appreciate any additional resources on how to go about doing it. What type of person would I speak with to structure it, and is it not worth the hassle below a certain $ amount?
I assume if leverage on co-invest is provided from a bank, you would still only get leverage availability based on underwriting for the employee (i.e. really small cap on total leverage relative to LLCs assets)?
I would be pretty pissed as an employer if I caught someone doing this.
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