How To Scale Your Investment Fund In 2026

Hey guys, welcome back to the show. My name is Bridger Pennington. I've launched 2 funds, launching a 3rd fund right now. We've helped over 4,000 people start in their process of getting their fund launched or started or scaled all through private equity, hedge funds, venture capital. And that's kind of what we talk about on this channel for you guys to enjoy. Today we're talking about the marketing landscape of a fund. It's funny, there's a lot of business principles that people don't apply to scaling a fund. And it actually goes both ways. Sometimes people overestimate and other people underestimate what the current landscape is. So in this video, I'm going to walk you through the way I look at launching new and interesting offers in the fund space. So with that, let's go to the whiteboard of truth and justice. A lot of truth, a lot of justice happens on this whiteboard. All right, so I've drawn out a nice little— I would say it's a pretty nice little diagram here of on this side we have the investor net worth over here, and we're going from $1 million, $10 million, $100 million up to a $5 billion net worth of investor. Now down at the bottom, we have a fund and this is, I'm just putting AUM of that fund. So the fund could start at $10 million, go to maybe it's $100 million, $750 million, $5 billion, $50 billion at the top, maybe $500 billion would be at the top tier of funds that we see around the world. And this is the funny thing about funds and the landscape we're in and it's actually very good for people like us. 'Cause there's a lot of people out there that tell me, Bridger, there's no way I can start an investment fund and compete with Citadel. who manages $250 billion or start a private equity fund and go against KKR or Bain or any of these huge, you know, $100 billion plus funds. I just, we can't compete. And then I asked them, well, what are you competing on? And they go, well, no, they buy companies and we're trying to buy companies and, you know, I don't think we can really compete. And I go, well, let's break it up into 2 categories. Number one is going to be investors competing on investor dollars. Who's going to invest with you or you're going to invest with Citadel? And number 2 competing on deals. So properties or projects or companies that you're buying, and I think this matrix really helped me and actually gives opportunity to small fund managers like us or emerging fund managers, people launching new funds. So back down to the whiteboard here, there's actually a lot of rules around funds and how many investors a fund can have. Now typically for funds, they can't have over 1,999 investors. So less than 2,000 investors In a certain offering, that's under the rules of 506, which are most these funds are in. Now because of that, these large funds over here like a KKR or a Blackstone, they only have 2,000 spots for investors. So they are very selective with who can invest in their fund. So if you look at this matrix here, you look at Ray Dalio's funds, they manage over a half trillion dollars, okay? So if you go up here, they actually their rule is. You cannot even talk to us about investing unless you have a $5 billion net worth and your minimum check size is $100 million. If you can't do either one of those things, we can't even talk to you about investing in Bridgewater. That's how exclusive they are because again, they only have 2,000 spots. The same thing's true with KKR, Citadel. They are very selective on who invests in their funds. And you're talking about investors, a lot of investors, can't even access those funds. Even if you're worth a quarter billion dollars, they will turn you away. The founder of Instagram, right, they sold it for Instagram for a billion dollars. You're still not allowed to invest in our funds. That's how exclusive of a group it is, which by the way is great news for us. So, number 1, because of this, you are not competing with Blackstone, KKR, Citadel for investors because you're not in the same category. So, if you look at this matrix, if you're launching a You know, $100 million fund, most of your investors are going to be in this kind of ballpark. They're going to have less than maybe $100 million net worth, maybe a quarter billion dollar net worth, down to $10 million worth, even a million dollar net worth, a credit investor. They will be your category and group. You're going after these investors. A KKR, a Citadel is going after, you know, these multi-billion dollar family offices and institutions. You guys aren't even in the same ballpark. for competing on investors. Is that making sense? So, number 1, you're not even competing, which is great, and you can see on here, you know, if you're a mid-tier fund, maybe you're a $5 billion fund, you're probably raising capital from investors that have at least a $10 million net worth or over. There might be a tad bit of overlap, but you can kind of play the numbers on what's going on with those funds. This also is true for deal size. So, if you look at the same thing, if I change investor net worth to size of deal over here on the left side, and let's say you're a real estate So you're going to buy and sell real estate. Now typically, I'm going to say typically because there definitely is overlap. If you have a less than $100 million fund, it'd be very different than Blackstone who's got, you know, a $100 billion real estate arm and needs to deploy that capital. Again, you most likely will not even be competing on properties because they're going to be trying to buy, you know, 1,000-unit properties and you're trying to buy maybe 30 units. Again, I'm speaking in generalities but you see the differences here. This is true for private equity. KKR is looking to take huge stakes in massive companies and it depends what market cap they're going at. But typically in a small private equity shop, you're still not competing against them on product, which is again great news for us. So, number 1, you're not competing against investors on against these huge ones, and number 2, you're not competing on product or inventory. So, if you're someone out there that's like, man, I could never do a fund and compete, you're not even competing. It's like, hey, we want to start a computer company, but we can't even compete with the same customers as Apple and Microsoft because they can only sell to 2,000 people. we can sell to everybody else. Imagine that marketplace, right? You'd have a lot more computer companies. But that's not the case. Apple and Microsoft can sell computers to whoever they want and their software and everybody. So it'd be pretty hard to start a computer company right now. Now, let's look to the other side of the coin where I get people that are overconfident in their offering and some people get blinded by their products and the first example I'll give you is online. I see this very common online. I'm sure all of us have a friend or somebody we know that's trying to be a fitness Fitness influencer online. I don't know about you. I think that's one of the most saturated things on planet Earth today is a fitness influencer. There are so there are tens of thousands of people with their little Instagram channel trying to put out workout videos and trying to make a difference in the world being a fitness coach influencer. It's like if we were going to set up a business, we're going to make coffee shops, right? I'm going to we got a great coffee recipe. You probably wouldn't say hey. There's, you know, 3 coffee shops on this one corner and it's Starbucks, it's Dunkin' Donuts, it's another local coffee shop that's really good. You probably wouldn't say, let's put a 4th coffee shop on the same corner, right? Like, we probably wouldn't do that. We'd probably find a little bit of location distance, all that kind of stuff. However, a lot of us do that online or with our businesses. For whatever reason, people don't look at the online real estate of what's going on and they just say, yeah, there's 100 fitness influencers, why not have 101? There's 100 coffee shops there, why don't we put another one there? And it boggles my mind that people don't see the red ocean and blue oceans that's going on. Now, the same thing's true in your fund, and this is what I do every time before we launch a fund. So number 1, I look at the market landscape right here, okay? I'm looking at investors, cool, we don't have a lot of competitions there, and we're looking at fund AUM, okay? We're not competing on either one of those, awesome. Number 2, in my local area or with my investors, my investor pool that I'm gonna pull from right at the beginning, and by the way, you should always be working on your investor pool, and I personally, I've got like 10 to 20 people that are good friends of mine that are high net worth individuals that I can call upon that I believe will invest in my funds and number 2, will give me great feedback on what's going on. So I'll go to them and say, hey, you know, is there somebody local that's been pitching you on a fund to do self-storage? What have you seen the local— I'm in Utah, local Utah, you know, western coast markets, and they go, well, yeah, there's these 2 groups and, you know, one's in Denver, one's in LA, and they've been pitching us like crazy and they're raising a lot of capital for self-storage. I'm like, oh, okay. Now, I have somebody over here in my competing market that's also raising for the same product offering as me. Good to know. Now, I'm not saying do something with zero competition. You can definitely compete, it's just a lot easier. When there's no competition, it's way easier than other offerings but if I went to that same investor and say hey, you know, is someone doing an NFT fund? Have you heard of somebody doing an NFT fund near us? We're gonna buy NFTs and get a bunch of cool stuff and they go no and I talked to my 10 buddies or, you know, friends that are other All high net worths. Have you heard of anybody doing an NFT fund? They go, no, that's a great idea. What are you guys going to do? Well, we plan to buy NFTs and we're going to trade them and whatever our plan is. So then I go, okay, we've got first mover advantage in this space. These investors have not been tapped on that type of pool. It'll be easier to raise money from them and easier to deploy that capital as well because I'm not going to compete with 5 other funds that are also buying the same NFTs as me. Is that making sense? You following along? This is business 101. You're testing your market. For whatever reason, fund managers don't think through this. Your market is your investors, number one. That's your pool. That's your— you know, everyone says like survey your customer, voice of the customer, voice of your investor, survey your investor. Have a pool of people that you can go to and talk to and stress test. If you're in our black card group, we do this with you all the time. Stress test, see what the current landscape is. Go online, do research on other funds, see what other funds are pitching. It's obvious. I just don't know why more people don't do it. So that's the second tier of it. If you're overconfident, go and make sure in your local, at least your local market of investors that you're going to first tap. And again, it's on a startup fund. You're typically tapping a local market at first, right? You're going to leverage your personal relationships, former bosses, all sorts of stuff in your local area. Look at what's going on currently. That's how I look at the investor landscape. You guys can see the investor net worth versus fund AUM. You're not competing in a lot of areas. And then number two, look for areas that you are competing with a similar fund type that's going after similar pool of investors or it's going to go after similar asset classes. Thank you guys so much. I know there's a lot more we could talk about on this channel. If you have More comments or questions, put them in the comments below. We'll make more videos about all this stuff. Thank you guys so much, and I'll see you in the next one. Bye.