Best Response
Frieds:
Alex... get used to it... Alot of people are assholes whether you like it or not. It's part of doing business...

No, I've found most people are actually nice/cordial, even the other guy and the woman in the room were nice.

I don't mind if someone passes on my fund, that had nothing to do with it. I actually really like some people that have passed on my fund (I think they're stupid for not investing, but I definitely still like them). He just had an incredibly obnoxious personality.

It was also like the fucker was trying to take advantage of me as if I didn't know what I was doing. I'm not going to change material fund terms and give you substantial equity for a six figure check (especially when I've already turned down a seven figure check because I didn't want to be diluted that much).

At the end of the day, I provide people a service and receive a fee in return. It's supposed to be win/win for both sides. If you don't want me to grow your money, fine; but don't act like you're doing me some sort of grand favor by offering to invest something like $500K in my fund whilst trying to rape me on terms/equity.

His tone was also very patronizing, which I found really amusing given that I'm almost certainly making better IRRs than his ass... (and, best of all, I actually mentioned a competitor to HIS business that HE, who does this EVERY DAY, had not heard about...his partner (the nice one), had to tell him who they were)

 

Btw guys, for someone to rub me the wrong way is really, really rare, so you can imagine how insanely abrasive this guy was...

To give you but one example (there are many), at the end his assistant asks him if he wants some documents I brought and he says, "eh I'm not really going to look at them, but might as well; his printing costs, not mine"...like really?!?!??!?!?!

Like I said, there were other rude things, but they're more finance related and would take too long to write out to get across properly...but you get the idea...

 

Alex, well... I've just wiped them out.

The fact is, and this should be an important read for EVERYONE about the difficulties of capital raising. People are stupid and you need to find the right people to negotiate with. If he was willing to come up to you and say I will invest $50MM in your fund, guaranteed, then I could see him trying to get better equity and terms, but not for a lousy half million. Hell, my shop has a half million dollar minimum on the bulk of client investments, but they never drop under half a million as the minimum, unless your an employee of the firm but that's a different story.

 

Yeah I mean, I would possibly consider something small, like say a few % points for a half a mil investment (just because having him as an LP would have lent me a big vote of confidence and let me raise more money than otherwise). I told him that if he knew of another fund running 40+% IRR that he was free to invest there. He said well "that's your target" (to which I thought, yeah, I TARGET 40% IRR net of all fees, right now my IRR is 53% net of all fees), but he said my track record is short (which at 6 months, it is, not gonna argue there, but at least I'm hitting the damn target IRR, lol), but he's smart enough to understand my thesis and see that i'm easily beating my benchmark (my benchmark is actually flat last six months and is what I'm most correlated to, I generate alpha off this benchmark). Statistically speaking, equities only account for about 1/4 of my price movements, so the run-up in the S&P 500 doesn't help me that much.

The most ridiculous part is that, given his line of business, if my fund does poorly; well, then his firm will be out of business because absolutely no way in hell his business survives if my investment thesis is flawed or does not come about. In this sense, my product isn't necessarily the best fit for him, since he already has exposure to the same macro trends, but at the same time, that also means he should like my product/thesis.

Honestly though, I'm at a point where I don't want to dilute myself significantly unless the check is really big (like at least $5M, preferably much more). If all I do is grow my current AUM at 30 or 40%, I'll be able to retire in 10 years anyway. I'm going to make those types of returns for whoever invests with me, yes, I'll collect a fee, but at the end of the day it's a SERVICE.

 

Your welcome buddy.

And you're right, you are selling a service. That's why it's called a management fee. If he doesn't like it, he just needs to say thank you, but I'm already exposed to it. While I agree with your thesis, I don't have the ability to invest due to overexposure.

 

I work very hard to keep a positive outlook, but honesly, I will admit that there are days when I imagine beating the fuck out of someone with a tire iron in the alley, or joining the military so I can come back and kill them efficiently.

Deep beaths and keep moving, let someone else take them out.

Get busy living
 

Alex, older men usually get this d-baggy in a presense of younger men when they feel threatened. Take it as a compliment. Old cooter probably knows that you will make more than he does now by the time you are half his age, and it's a really sucky feeling for him. I mean "printing costs"? SRSLY? WTF is this, Guttenberg? Cut your losses and be like I have a feeling you aren't really in a position to invest right now, so I won't inconvenience you further. My contact and fund info are with your secretary, if you change your mind.

More is good, all is better
 

Try and laugh it off and think if someone as arrogant and stupid as him can make it that far, picture where you'll be 20 years from now. Hell, we live in a country where George W. Bush was not just elected President, but reelected.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions. -Niccolo Machiavelli
 

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