What kind of experience optimal to start your own fund?
Five years of broad CRE experience at a boutique PE firm and a BB. Started in capital markets as an intern for one year but since then have worked in AM/underwriting/acquisitions roles on all manner of strategies from opportunistic to core. I am mulling over accepting a job in AM at another BB and was just curious what skillset people think is most critical to close and then manage your own deals between being on an AM/Dispo/Acq/UW team at your company prior to going it alone.
Thanks.
All of them...when you start your own business or fund, you will either need to do all aspects of the job or find people who can cover your blind spots. If I had to pick one job function as most crucial to starting a fund, then I’d say acquisitions because you learn investment strategy, capital raising and financing (can’t start a fund without equity). However, if you do not have asset management experience and are unable to execute your strategy then you’re also screwed. That’s why many firms start as partnerships. Maybe you find a partner with an asset management background and you have acquisition experience, then you could focus on sourcing and financing deals while your partner focuses on asset management and anything in between you learn on the job. Also, if you’re trying to raise a fund, brand name and experience matter a lot. If you worked as a Principal at Blackstone for example, investors feel safer investing in you because of your background. If you worked at a smaller shop, raising capital from new investors may require more convincing; however, if you worked with the investors from the smaller firm, they may invest in you because they know and trust you.
Frankly, having the ability and connections to raise money is probably the most critical skill if you are going to be successful starting your own fund. You will do zero acquisitions and have nothing to manage if you don't have capital. So, roles that let you talk to LPs, bankers, DD/consultants, or just a shit ton of rich people or allocators are probably worth considering. If you can attend the PREA conferences (when they start back up....), you really should, all the money is there and they are small conferences.
Also, the 'name' of where you used to work isn't going to impress people much, track record of execution is what they will care about so I'd factor that as well.
100%. It's all about having investors trust you with their money. You'd have to know the mechanical stuff down cold (acquisitions, asset mgmt, etc) but most importantly be able to maintain a consistent track record. All people care about is if you can make money for them, click with them (similar hobbies and interests), and how safe you make them feel about their money. Redev knows what he / she's talkimg about
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