How To Build A Track Record for Your Investment Fund as a Beginner

Hey guys, welcome back. So today we're going to talk about building a track record. Now people have been asking me, Bridger, yes, I want to get started in this fund world, this game, but I don't have a track record. I don't have experience. I don't know where to start. Nobody's going to invest in me. And when I started out my first fund, this is one of the biggest questions I had. I'd never managed money before, and how do I build a track record? How do I gain that experience? And I want to walk you through a couple of examples of how to do that. Now, first, the simple example is you can partner with somebody who does have a track record. Yeah, it's always like the best answer, just partner with somebody who does. If you feel like you need the Harvard degree, you need the track record, you need the, the investors, just partner with someone who already has that. We do in our mastermind group, actually, we have a lot of people in there that are partnering up with each other. That's what we try to do is bring people together to help them find those connections For those partners, but let's say you don't have a partner. You want to build your own track record. What do you do? Okay, so come back to here. You guys remember the fund launch formula, right? We talked about this before. The fund launch formula, quick review. And if you're on the podcast listening, I'm going to talk. I have a whiteboard here, but I'm going to talk through it a little bit. Okay, so step number one is finding an amazing deal or opportunity. Okay, for mine, it was microfinance loans. For other people, it's it's buying and selling rights to Netflix shows. For other people, it's buying and selling Amazon businesses. For other people, it's investing in the stock market, in forex markets, in futures, whatever that is, or you partner with somebody with that amazing deal, okay? For house flippers, you find an amazing house, okay? That's all right here, and we talked about that in other shows. I'm not gonna go deep into that, how to find that amazing deal, okay? So step number 1 is finding that deal or finding the person with the deal. Step number 2, you frame the deal out. So I get on a spreadsheet, I walk through how's everyone gonna make money, let's, let's make sure this really is a good deal, get my little pitch deck together. And step number 3 is then go and pitch investors, okay? So at that point, before you do legal documents, this is way important, is to right here go and pitch investors, get money in the fund. Like, wait, Bridger, hold on, I can't pitch investors without legal docs. Yes, you can. Okay, if you're— if your legal's in and you go pitch an investor, you say, hey, Mrs. Investor coming in. Hi, I've got this great deal. We framed it out. Now our legal docs are not done. They are in the process. However, this is the deal. This is what it's looking like. If everything checks out in a couple weeks when the docs are done, would you put in $500,000 to this deal? If— let's just say if it all checks out, can I put you down for $500 grand? She goes, well, you know, yeah, I want to see the legal docs first. You go, of course, yes, you're definitely gonna want to see the legal docs. But yeah, if, you know, if this all checks out, yeah, I think I would be comfortable. If everything you're telling me is true, I would be down to, you know, put in maybe $200,000 or $500,000. You go, great, let me— I'll put you down for a soft commitment of, let's call it, $500,000. They say, great. So you get soft commitments here, and then and only then, when you have soft commitments, it gives you the motivation and the fire to go pay for legal docs, get it done, and get it done right. See, what happens is sometimes you go pitch investors— that's— this is what I call market testing— pitching investors and they don't like it. They don't like how you set up your frame. They don't like the deal. They don't like the structure, and maybe they poke holes in it that you never thought about. So what's nice here is if you had already spent $30 grand on legal docs and then took it to investors and nobody liked it, well, now you're out $30 grand and you've got to pay that legal bill. If investors don't like it and you haven't done legal, well, just go back to the beginning. You go back to step 1 and you can restart on the Fund Launch Formula, okay? So that's the Fund Launch Formula in a nutshell, and then step number 4 is doing the actual legal docs. Okay, now Bridger though, how do I build a track record? No one's gonna believe in me if I don't have a track record, and this is a great point. So this is where I'm gonna change my markers over to fund versus syndication. Okay, so I'm gonna type— I'm gonna write fund up here and syndication. Actually, I'll put it down here, syndication. I call this the syndication loop. Okay, so fund model is up here, syndication's down here. Syndication, what I mean by that is it's a deal-by-deal basis. You are syndicating money together. You're finding investors and all putting money into, let's call it just an LLC. You're all partners in the LLC to do the deal. So for example, I think house flippers are probably the best people on the planet at syndication loops. They find a great house to flip, they go set it, like frame it out. Yeah, we could, you know, we're gonna put in a new entryway and the doors, we're gonna paint carpet, whatever it is, frame that out. They go pitch investors. The investors put money into a simple LLC. Okay, down here, they become partners. So the, the house flipper will say, hey, because I'm setting everything up, I'm gonna retain, let's call it, 25% equity in the LLC, and all investors have 75% equity pro rata how much money you put in. So if it's a $100,000 flip, okay, and then let's, let's say the house flipper is gonna put $0 in. For everyone that puts money in, the 75% of available equity will be split up among you guys pro rata how much money you put in. So if you put half the money in, you get half of the 75% available. Okay, so all these investors now are partners with you in an LLC. You guys are actual partners, business partners. You though are still doing the deal. You go flip the house, everyone gets paid, cha-ching. All the investors get paid, you get paid your 25%, they get paid the 75%, and you go back to the beginning and you find another house to flip and you flip that house and that is how you build a track record. Because in these syndication deals, you are finding a great deal like a house flip. You're going to the investor saying, guys, I'm, you know, I'm not this crazy expert but look at this deal. This is an incredible deal. Look at the house. You can have your people look at it, you're good at real estate. Look Look at this, this is a pretty good deal. Let's put money in on this deal. And maybe you partner with somebody too that has, you know, some knowledge, right, to help you piggyback off of their track record. You say, guys, this is, this is a deal-by-deal basis. We're doing one deal right here. Let's put money into this deal. You're going to be an actual equity owning partner in this deal. Everyone puts money in, you help facilitate the deal, and you come back to the start. Now, a lot of people that maybe listen to the show are very good at these— this syndication loop. And I'm getting a little messy on my whiteboard. This syndication loop, okay? The problem with syndication—I call it almost a hamster wheel of syndications. What I mean by that is this: is if you know anybody that's a house flipper, I know a few house flippers and they do lots of flips. They do 20, 30 flips a year, all following this syndication loop. Now what happens, and you guys know if you've done this before, it gets pretty tiring. Every single deal, you have to find the deal. You got to frame it out. You got to find investors or new investors. You're always pitching people. They always want different. They got to restructure the equity and know what this time I want 80%, not. Not 75, and everyone puts money. It's always a negotiation. They put money in. It's always hard. Then you can do the deal. Then you got to restart again. You got to find new money, and it's this— I call it a hamster wheel, and it's good. You make good money. However, it's, it's hard to scale through that model. A quick story I want to tell you is about my dad. So my dad, you guys know my dad, co-founder of $20 billion family of funds now, originally started out doing syndication deals. He was running a debt fund, and a debt fund essentially is is you were giving you were issuing debt or loans to different people for projects. For them, they were issuing projects on real estate. So if someone had a good real estate project, they would issue a loan for you to finish that construction or the project, whatever it was. Short-term bridge loans. What happened to them is they were doing the syndication every deal. They had to find new investors. They were always on the phones, investors getting new documents, getting legal setup. And one Friday, one of their investors was last minute. They were closing on a Friday. They had money down, and one of their last investors didn't. in, I think it was like 40 or 50 grand because the bonds didn't clear, whatever happened. They're on the phone, sorry, I can get the money by Tuesday, but it was too late and they lost the entire deal and their hard money. And at that moment, my dad said, he's like, Bridger, we had done everything right. We had set up the deal, we had done well. I mean, it was a good deal, we had investors, and because one investor didn't follow through, we lost this entire deal and our investors' money. They were mad at us and it was out of our control. He said, we are never gonna let that happen again. And when we want to— he says we want to scale, and everybody that eventually really scales ends up in the fund model up here because the fund model is beautiful for a few reasons. Number one is you set up the deal. So you do the same structure, you go deal, frame, investors, but you set up your legal documents once, and from there you can do deal after deal after deal after deal. Now each deal you have to structure differently within yourselves, But you aren't finding new investors and setting up new entities for every single deal you do, or you're not finding new investors and renegotiating equity. It's you find your investors once, they put money in once, they commit the capital to the fund, and you have this huge pool that you can just draw down. So I tell house flippers, imagine doing 20 flips a year and you just have a pool of money you can just do as many flips as you want from. You don't need to call new investors, find new money, get new money in. You just have a pool of money, the money comes out, and you put the money into deals. How amazing would that be? And that's why eventually most people that are in the— this finance deal-making world eventually end up in the fund model, because it is— it's hard to keep doing that over and over again. And sometimes you get one down here in the syndication loop, you get one investor who's now a partner that gets mad at you and they own 35%, and they're like, hey, I don't like you. I'm a bigger shareholder than you. I want to kick you out of this entity. I want to take it over. They do aggressive takeovers. I mean, it gets messy sometimes, a little more risky to do these syndications. However, back to our original topic of building a track record. This is a fantastic way to build a track record. It's hard to just go right into a fund and say we're gonna do this 30 times. The syndication is a way for you to build your track record because you do a couple syndications and then you can scale through your fund. My first what I call a fund was actually a syndication. It was an LLC. We had investors put money in, I retained 30%, my investors had 70%. We did, I think, 5 or 6 deals in here in the syndication, and we said, aha, it's ready. We proved the model out. I paid all my investors back, and we said, now we're restructuring and we're going to the fund. And guess what? All those investors from my first syndications, they all gave me trial investments. Most investors that I've seen, Well, give me a trial investment. Bridger, I'll give you a trial investment of $50,000, maybe $100,000. I said, great. I say, I'm gonna knock your socks off with that trial investment. They put their trial investment into a syndication, and I— and you got to knock their socks off. You got to perform, right? It's got to be a good deal. I performed on my funds, and they said, wow, okay, we're willing to write a lot bigger checks now in the fund because you've gained our trust. You've proven your model out. So that is how I believe you can build a track record without going to Wall Street, have an Ivy League degree. This formula, using the Fund Launch Formula between syndications and funds, works. Now, our programs, our groups, our mastermind, we help people do syndications and funds. If you're— whether you're A to Z, this podcast, the show, this is designed to help people in both scenarios, to help you build a track record. And I think this is the best way to launch and get started. If you want more info on the Fund Launch Formula, we have other episodes you guys can see more in depth. On how to find deals, how to make— frame things out, how to find those investors. But this is kind of the overview of the entire thing. Hope you guys enjoy, and I will see you next episode. Peace.