Any ideas on what I should do?
Hey guys -
Have a question regarding a situation I'm in - hoping the more experienced guys can chime in here. Long story short, a while back, I was given the opportunity to run a fund with seed backing from one HNW guy. Background is I've worked on the buy-side for ~7 years in the PE/
It's becoming increasingly clear to me that the fund structure isn't ideal. What do I mean by this? My one main partner who has seeded the fund with his own money essentially brought in 8 other of his "friends" as GPs. While some of the guys have value adds (lawyers so we get free eyes on legal, etc.), others are completely useless and don't pull their weight at all (some of them have never even invested in the fund - literally $0 - and the ones who have, have invested as much as $100k). For context, I run the entire general operations of the fund and the investment process end to end (Idea Generation, Diligence, Execution,
My comp is a base salary in the $200s, 10% ownership in the GP, and 4% of gross PnL. I've also had to contribute no money to the fund at all; my partners have bankrolled everything.
I knew exactly what I was getting into when I accepted the above offer to run the fund, as it was a great opportunity to step up from Analyst to PM and have complete discretion in the investment process - my experience has truly been amazing. However, it's becoming really irritating to me that I'm a 10% owner in this fund and have complete responsibility for everything while mostly everyone else is freeloading, not replying to my emails, and honestly not contributing anything of value at all - I simply don't think that's fair or equitable. While I'm grateful for the opportunity at hand, I'm also mentally forecasting this situation out, and I can't see myself working here over the long term as a 10% equity owner. It was also pitched to me that I would "run the fund", and my partners would raise money. It's been a few months now with 0 dollars coming in, and I've been having to shoulder this on my own while concurrently running the fund, which is a bit stressful. I am also a bit resentful towards my partners because they haven't delivered on their end of the bargain. This has also rang true in a few more instances where what has been promised is not what has been delivered.
Since I've been up and running, I've attracted the attention of 4-5 different parties who have reached out to me unsolicited - and have been courting me to replicate my investment strategy with them; these parties range from asset managers and family offices to larger hedge funds, etc. All of these parties would give me, on day one, starting capital to manage of $25mm-$100mm+ to manage in addition to better economics than I'm getting now. As an FYI, I structured into my current contract a portable track record, no non-compete, etc.
My questions are this:
Based on the above, what % ownership do you think is fair and equitable for me to aim towards with my partners?
When should I bring up my concerns to my partners? I was thinking after I finish up November/December (and obviously contingent on performance), I bring this up early next year?
If my partners refuse to give me the % ownership I seek, what should I do?
Should I look to make a jump to another platform in light of the fact that I only will only have 4 months under my belt at my current firm? What if the offer is more compelling?
I have a few $mm waiting to come in to invest in the fund, and I also have potential capital commitments to investments; how do I handle both if I end up leaving?
Thanks much everyone.