Funds Were Hard Until I Discovered This Framework (Fund Launch Formula)

So, in this video, I want to dive into the actual process for launching your fund. Now, in Black Card, our top group, we've launched over 240 funds in the last about 2 and a half years, which is pretty significant. Additionally, I currently manage 2 funds myself, and I've also interviewed dozens, if not hundreds, of different fund managers on how they built and launched their funds. And what's funny is we didn't build the fund launch formula. It's more like we discovered the fund launch formula. This was the same process That all of these entrepreneurs had used to launch their funds. They just didn't coin it with that terminology and finally we said, I think there's some 4 distinct categories here of what you did and in this order to launch your fund. Now, the other thing that's interesting is if you go Google how to launch a fund, you will read some blog posts of people that very obviously have never launched a fund and what you'll see if you go to my whiteboard here actually So the fund launch formula, it's a four-step formula. What most people will tell you on a blog is, hey, when you're starting your fund, first thing you need to do is go hire a lawyer, and you go pay for legal, and you go do that, and then you'll you're gonna pay thirty to like fifty thousand dollars in legal, and then you're gonna hope to go raise money, and if you don't raise money, well shoot, sorry, you're out thirty to fifty grand, and like. And it's very obvious that most of these, I think, well-intended blog writers have never launched a fund before. And what happened was I started to interview these fund managers and they did actually the exact opposite. And as you can see on the board, legal is actually our 4th step. It's actually the last step in the fund launch formula, okay? So then Bridger, what is the first step? Like how do you actually get into this and go and launch a fund? your fund. So I'll tell you a quick story. So I was launching my first fund, I was 22 years old. So you guys have heard my story and I was with my dad and my dad's kind of walking me through launching a fund and my dad ran this multi-deca-billion-dollar fund and I'm sitting down with him, my dad's told me, you know, he's not going to invest with me, whatever, but he was a great mentor and still to this day, my dad has never invested in a single fund I've ever done but again has been a great mentor and coach the whole thing. So we're sitting there and I'm like, Dad, who's going to invest with me? Okay, I have no track record. I've never ran a fund before. I'm 22 years old. I'm in college. Who is gonna write me a check? He says, Bridger, imagine me and you. We just got a call from a lady up in— I'm gonna zoom in for a second— Billings, Montana. Okay, she's in Billings, this wealthy woman, and she's had some financial trouble though, and she's trying to sell her Lamborghini Aventador. It's about a $300,000 car. But she needs cash like this week by Saturday. She is willing to sell the car for $50,000 Saturday morning for anybody that can show up with cash to her place in Billings, Montana. And we believe we could, you know, if we gave it some time, we could sell the car for $300,000. And he goes, just go with me for the example. I'm like, all right, cool. I'm with you. He says, Bridger, you can't use any of your own money. Could you find $50,000 by Saturday and you're gonna make a spread of about $250,000 after we sell this car? And yes, you have to pay back your investor and maybe some interest or whatever but you're gonna keep let's call it $150,000 this week. And I'm in college like, man, I mean that's a pretty good deal. He goes, Bridger, the question is a question for you guys. Could you find $50,000 by Saturday morning? And I really thought about it. I was like, well, you know, I could talk to a former boss, a college professor, a grandma. And I was like, you know what? I'm gonna make $150,000 this week? I'm like, dang straight, I'm gonna figure it out. You know, like I'm gonna go full like drug dealer mode. The old quote of like, hey, you know, people that buy drugs, they always have money. They find it somewhere, right? It's like, okay, I'm gonna figure it out. Maybe I won't steal or cheat or whatever, but I'm gonna figure out how to find some money. Because yeah, I'm gonna make $150 grand this weekend. Like, I probably won't sleep for 3 days. But yeah, you know, I told him, I was like, you know what? I bet I could find $50 grand. And he goes, okay, what about $100,000? Could you raise $100,000 to buy this car? You're gonna flip it. You're gonna make a $200,000 spread. Maybe you split it with the investor. Maybe you take home $125,000. Take home to you. Could you do it? And I was like, you know what? Yeah, I think I could do it. My dad asks me why and I said, well, the deal is so good. Like you set up this awesome deal, you got this lady in Billings, Montana, the Lambo, and it's just too good of a deal, and he goes, aha, there it is. I was like, what do you mean? He goes, 3 minutes ago you were telling me that you were broke, you weren't in college, you didn't have a track record, and all of a sudden you're telling me you could raise $50,000 to maybe $100,000 by Saturday because why? The deal was so good. He goes, what's funny is a lot of us can actually raise a lot of money if the deal and opportunity is right. Interesting, and as an investor, they can look past sometimes inexperience a little bit because of how good, how foolproof a deal is, and if you just show them the deal directly, hey, I think I'm decently smart, but you're smart too. Just look at this. How do we lose money on this? We are buying a car for 50 grand and we're gonna— we can sell it for $300,000 and we've checked out the mechanic said it's real, the title's real, we have title insurance. Like, we've— the whole thing is legit. You tell me, Mrs. Investor or Mr. Investor, how are we losing money on this? And he goes, That's how you raise money on your first fund. That's how you raise money. And I was like, oh shoot, like that, it totally reframed my brain. And for the same thing with you guys, he goes, step number 1 of the fund launch formula Is have an incredible deal and/or set of deals that you can go and build out and be a part of. Now, if you're not good at finding deals, if you're not that guy or gal, find someone who does. And every fund, I think we have another video on this, but to review, every fund has 3 distinct people on that fund, okay? There's someone who's the expert investor. This person's really good at finding those Lamborghini cars, okay, or trading options in their basement or buying real estate. Okay, they're just a nerd. They're a geek about this. The second person is someone that's really good at running funds. I'm more of this person. I'm very good at SEC compliance, like the operations of a fund, running the fund. And then finally, someone who's a really good money raiser, someone that can go out as a natural born salesperson. This is probably a review for you if you've seen this before, but this is how, if you feel like you're not competent in this area, this is how you build a team that can make you competent in that area to then structure Alright, so to review, that's step number 1, find an incredible deal. Now most people at this point go, okay Bridger, I'm so excited. Can we go do legal? I'm going to hire a lawyer. Let's get started. Let's get going. I go, eh, hold on. Before you go hire a lawyer and get all excited, step number 2 is go and frame the deal out. Run through the scenarios. Run through what it's going to look like, how payouts will work, how you're going to work with your investors, the waterfall structure, distribution, what type of fund you're going to structure it at. And we'll talk about all this later in these videos, but to frame it out, you then drive all those details typically down to some type of PowerPoint presentation or a PDF that consolidates your full deal and fund down to one thing. Okay, now if you're here with us, we have templates and other cool stuff. We'll talk about the marketing and we'll get into that in a minute, but drives all of it down to some kind of cool PowerPoint, which then You take to step number 3, which is where you start to raise money. You actually start to go and pitch investors. But wait, Bridger, hold on. I haven't done my legal work yet. How do I go and raise money? This is how I've done it. Okay? And this is how people through our entire program and people outside of our program have done this. You want to build a fund that investors want. They're actually begging for. A lot of funds never launch because they build products that investors don't want. I'll say it again. A lot of funds, most funds never launch because they build products that investors don't want. They go to step 4 first. They then pay $50,000 in legal work and they build this fund and no one wants it. So what happens on step 3? We found a good deal. We frame the deal out. We got an idea of how the fund will run. We then, what I would say, go find a mentor or someone that's wealthy that you already know. If you're in Black Card, this is us, actually. We have 11 different coaches that you can come talk to and you come and actually pitch us. Pitch us your deal. And maybe you reach out to a mentor and you say, hey, do you have 11 minutes where I'm potentially putting together a deal? I know you're smart, you're wealthy. Literally, can you give me 11 minutes I'm going to run this deal by you and I want you to poke as many holes as you can in this deal. It's a real thing. I'm actually doing this, but I want to run it by you first. Do you have 11 minutes to hop on Zoom that I can talk to you? If it's someone in your space, hopefully they should say yes to 11 minutes. What happens is you're going to hop on and you're actually going to give them your full pitch. You're going to run them through the deal and you're going to see what questions they have and they are going to try to poke holes in your frame or deal. And what happens is more times than not, when you get here, they're going to point out some really interesting stuff. Hey, Bridger, what if you die? What happens to my investment? Oh man, we didn't think about that. Let's go back to the frame stage and we'll figure that out. Or maybe there's a certain part of this deal where we could lose money. Have you thought through that? What happens is they'll give you things to iterate and then bring and say, okay, I'm going to go fix those things. Can I come back and give me 22 days, I'll be back and I wanna talk to you again. Or find a different mentor to come pitch, okay? And what happens is you go through this process, this iteration process, where you figure out your deal, you go to frame, and then you go to the money raise, and then you go again. You start and you build and start tweaking this fund over and over again until you go talk to one of these mentors and they go, you know what? This is actually pretty awesome. You actually doing this? You say, yeah, you know, we're getting legal done the next few weeks, but this is actually gonna be a real thing. If everything checks out just like I presented to you, all the legal docs and stuff, can I put you down for a $100,000 commitment to the fund? And what happens is what I like to call you get soft or verbal commitments. Our goal, if you guys are in Black Card, is to get everybody in there about $2.5 million in soft or verbal commitments before you go to legal. Because that shows validation that you're building a product that investors want and actually are willing to put money down to invest into. Is this making sense? Like, you following along? That's why this Fund Launch Formula is so massive. Your lawyers will then build out your PPM, your LPA, all that. We'll talk about this in all this training. You guys will see all that. But they'll build the PPM, and then after they build it out, you take those and you go back To these investors and say, hey, remember we talked 2 weeks ago? I got the legal docs done. This is the deal. Boom, boom, boom. You re-pitch them. Hey, can I put you down for $100,000? Here's the documents to sign. Can we get those going? You know, there's always gonna be some people that drop off throughout this, but hopefully most of them stick, and now you've launched a fund that's already funded. Okay? This is how entrepreneurs launch funds. I'll tell you a quick story. I had a friend who did not do this. He went straight to legal. He spent, it was like $40,000 for their first version of their docs, and then he went and pitched investors and the investors gave him a bunch of stuff to change. He's like, oh yeah, that's a good idea. So he goes back to the lawyer. The lawyer says, hey, can we change this? He says, yeah, great. And lawyers love to do that because they bill by the hour. So his lawyers bill him by the hour. They're charging, you know, $800 to $1,200 an hour. Yeah, we'll happily change that. They change some stuff up. Comes back. He's now at— he's now spent like $65,000. They come back. They want to tweak a few more things with different investors. He then wants to restructure his fund. He has new partners that he's bringing on the deal. He comes back. They redo the documents again. He ends up spending over $600,000 on legal documents for his first fund. Not a joke. That's a true story. Because he didn't follow the fund launch formula. This saves you and your lawyers and your wallet so much time because you do the iteration process not with your lawyers, but you do it with your investors here. And you do it up front, okay? Is this making sense why this is so crucial? I'm erasing some stuff here so you guys can see it a little bit better, okay? That's why the fund launch formula is so magical. The last story I'll share is, this is with me, Bridger Pennington. I had a fund in 2020, 2020, actually, I wanted to launch. I'd already ran my fund for a number of years. There was a new fund we were gonna do. We were gonna buy big box stores, like old malls, 'cause during COVID we were gonna transform them into like storage units, office space, like make 'em a better and higher use, 'cause all these malls were empty. We had a bunch of properties that were distressed we could buy. It was really close. We found some cool deals. We thought it was a pretty good idea. We had a good team on it. We went and framed it out. It was kind of fun. And then we went and pitched investors. And they poked some really good holes. And honestly, we went back and reevaluated our team. We looked at our structure, the properties we were buying, the market. And based on the feedback we got here, we're like, you know what? I don't think we want to launch this fund. I don't think we can drive enough alpha on this fund to make it viable for our investors. And we ended up not launching the fund. Which is okay. And all we wasted was a little bit of time. And I had a chance to test out these potential partners I was going to work with. And we ended up not launching the fund, which is great. It's way better than spending $50 grand with legal fees and then learning we don't want to do this fund anyways. That's where most funds die and you're stuck with a $50,000 legal bill. Okay? That's why the Fund Launch Formula is so massive. Now, if you saw our earlier videos, we're going to talk about the Fund Launch Formula in more depth through the next few videos. This is kind of a better version, not the drawn-out version of the Fund Launch Formula. Okay? And this is the sub-frameworks that go into each one of them. We just talked about this one with deals. We have all these sub-frameworks that go into the Fund Launch Formula that you'll learn through the next few videos and while you're here about how to go through step 1, step 2, step 3, step 4, and ultimately launch your fund. And we've built this out, we've stress tested it, it's an amazing process for you to go build your fund with whatever vertical you're doing. So this is the bigger framework that we're gonna be using for the next few videos. I'm excited to dive in with you guys into the mega framework, and it should be pretty fun. Awesome.