A fund manager running two eight-figure funds breaks down competitive edge into four buckets: asset class, strategy, team, and deal structure. His father's bridge-loan fund charged 0% management fee with a 16% preferred return, creating structural edge. Pick one bucket to dominate and you'll stand out.
Chapters
How to identify your edge in your fund. I currently run 2 8-figure funds and I want to walk through this in 2 minutes or less. So drop the timer on the screen. Ready, set, go. So on the Fund Launch Formula, we've helped over 300 people launch their funds through Fund Launch. And I want to talk about this piece right here, building out your unique edge. The first edge that you would have, there's 4 different buckets here, is on your actual asset class. So the asset class that you choose to be in, can or cannot give you an edge. For a while, having a, you know, an AI startup or a blockchain fund was an asset class edge by itself just by being an emerging technology. Now you may or may not have that one, but let's move on to the next one. It doesn't matter your asset class as long as you have a great strategy. So you could say, hey, we're in a boring asset class like multifamily real estate, but we have this unique and compelling strategy edge on how we approach the asset class. Is that making sense? Okay. That would be the second category where you could find an edge. Third would be on the team, on the team and how they execute. So hey, we're in this asset class, we have this strategy, and one of our edges is the team that's going to execute on the strategy in this certain asset class. And then finally here, we have the actual structure of the deal. Now let me explain a few examples here. So for example, Ugly Unicorns, the 2 funds that I run right now. This is kind of how our edge looks. We believe we have an emerging asset class. This one is in blockchain, Ugly Unicorn, and this one is in GP stakes. Very compelling and hot asset classes right now. We also believe we have a really good strategy to capitalize on that asset class. Furthermore, our team, you know, we're okay. It's not like we're, you know, Peter Thiel or some crazy investor, longtime crazy person. It's not like we're Elon Musk. Our team is okay and our structure is kind of Neutral. You can see other ways here on how things are put out. By the way, I didn't describe the structure here as how you structure the deal. This is pretty standard. 2 and 20, 2% management fee, 8% pref, 80/20 split. Our structure is pretty standard. So there's no compelling edge to our structure. However, my dad's first fund, when he put this out as a bridge loan fund, his structure was crazy. He said, I don't make any money unless you guys make 16% First, he had a 0% management fee, 16% pref, and then a small split above that. It was a very compelling structure to people. So for your edge, go to one of those 4 categories, lean into it heavy, and that will give you a distinct edge in the marketplace.
