How do people in their early 30s go about opening their own shop? I have a friend of a friend who is 32 and he quit his job as a development VP and is opening his own development company to pursue some deals that he has on the West Coast. From my experience, not only do you need significant capital to fund upfront cost such as soft cost and land deposits, but in order to sign for a loan you must have a significant net worth. From what I have heard, he has institutional partners. Are there some partners that will operate without you having skin in the game?
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Rich family members or they've got a unicorn LP. The closer I get to our LPs the more I realize how much breadth there is in that space. There are all sorts of weird institutional people that have their own unique bent on the world... I always imagined it being more cookie-cutter.
Curious about this as well.. comes from money? Or is his track record strong enough (clearly enough for institutional partners) that he can get debt despite the lack of “skin in the game”? Maybe he’s got a financial backer who participates at the sponsor level?
I see this last point more often. A lot of Co-GP groups out there that will put up a big chunk of the GP equity and sign guarantees for a piece of the promote. Benefits both sides
Havent heard of many co-gps that sign carveouts. Money yes but PGs and credit enhancement is tough especially on a first deal
every story I am personally aware of involved having the direct support of an "angel" investor type who not only would fund deals, but also pursuit costs and sometimes even operating costs (rarer). That plus accumulated savings from bonus/promote payout... and yes, rich family is a major category, but investors (even former partner/owners) from prior employer are common as well. Bonus points to those who have a working spouse who can keep the lights on at home (the lack of salary is a legit hurdle to factor).
Is he doing development as a fee for service? I know a few developers who started off this way - managing projects for a family or an individual with an empty lot. Then they grew into doing self funded/equity deals since they now had the “experience” on their resume.
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