Start an Investment Fund in 2026 Using This Formula

Alright, welcome back. Today we're gonna talk about, we got here the Fund, it should be the Launch Formula, Lincoln wrote it out wrong. Fund Launch Formula 2.0. And we put, I mean, it's, I don't know what year it is, 2011 maybe, 2.0.

Yeah.

Going way back, but this actually is a crucial video on what is involved. You guys probably know the Fund Launch Formula by now. Step number 1, find the deal. 2, structure the deal. 3, raise the capital. 4, file the docs. What does that mean? So in this video we wanna We're going to go in depth on each step. What is the timeline of what you're doing? When do you set up the bank accounts?

When do you— When do I put a pitch deck together? When do I, you know, actually file my docs? Like in terms of when do I set up my bank account, my entities, and all those things?

A lot of questions we get. We hope to answer them right here, right now.

Okay, so let's define this a little more though first, Bridger. Finding the deal, what does that actually mean?

So let's use an example of a hedge fund. Okay, so when I say find the deal, you guys have heard before the Lamborghini example, right? The example my dad gave me, if we found a great Lamborghini, if we could buy it for $50 grand on Saturday, I could go raise the money, right? That's how he helped me overcome my money concerns. You guys have heard that before in previous videos. So find the deal. When I say deal, this is your investing strategy, your thesis. Now, this is the same structure, by the way, for a syndication or for a fund. So in the case of a hedge fund, and maybe you're going to do a hedge fund incubator, or maybe a small version of a hedge fund, your deal would be your trading strategy, your algorithm, the way that you're going to trade, maybe it's cryptocurrency or futures or options or commodities.

Your alpha.

Yeah, how are you going to find alpha? Why are you someone they should bet on, or who's a partner that you could find that has that incredible strategy, that incredible deal? Does that make sense?

So one of the best things that you can do is once you think you've figured it out and you've found your alpha, Just put it down on paper, okay? This is when you should be making your pitch deck. Whether you're gonna use it or not, you should still write it down, right? You obviously can raise money without having a pitch deck, but putting it down in methodical, like thought-out order, and then you'll just know. It'll help you in your ability to raise money. So just put it down on paper and put a pitch deck together.

And when you're doing this pitch deck, this is rough draft version, right? You're just throwing stuff down. You're thinking through what types of things you would pitch your investor. And with the example for a hedge fund, again, How much, what's your minimum capital commitment? How much money do you want from investors? How much money could you manage, right? A lot of funds will cap out at some range. Maybe it's a billion, maybe it's $10 million, maybe it's only $1 million that you feel you could adequately deploy and execute on your strategy. You're gonna put that all in here. By the way, in step 2 below, in structure the deal that we have in the course, we have a great example of framing where you can think, it'll help you think through what you want to do in your fund. So you're right here, you'll think through, do I want to charge management fees? Do I want to charge performance fees? How do I want those to look? What's my carry? What's my catch-up? All that stuff you're putting together. Maybe you could put another line here on framing just out your fund and how the fund will look.

Great, so framing out your fund. So these happen in tandem. You know, when you're putting a pitch deck together, it's a comprehensive process. It's not a sit-down once and you're done, right? You're going to make edits to this. You're going to change it. You're going to adjust your pitch and cater it to a way that appeals to your investors. So along with that is you may put a pitch deck together and you realize, you know, who am I going to have as my fund admin and what pieces of my team am I missing? So in this process of finding the deal, structuring the deal, you should be looking at, you know, because on in your deck you want to have like who you're— if you're a hedge fund, like who your prime broker is. So start shopping around. You don't have to commit to anything. But just have somebody as like, hey, this is our identified preferred partner for this, right? And then of course team, and like if you're lacking credibility, then who could you get on your board? And start thinking about these things early, right?

And I love what Lincoln said, you're iterating this whole time, so you're going back to the pitch deck, you're finding new team members, maybe other team members are falling off, you're putting together what you think is a frame, truly a frame, that's what we call this number 2 structure, you're framing out your deal and fund, About who's going to be involved. So as you're getting these things together, I think it's a great practice to go and start pitching your fund, pitching your deal. Now these pitches are going to vary a lot over time as you go, but I like to start working with potential investors. And the first people I go to on this right here— and you'll do this a lot of times, by the way— step 1, 2, and 3, you're going to go Do this once and then you're going to go back to the beginning. Oh shoot, we got to find a different deal. You're going to come back and restructure and then you're going to re-pitch and you're going to go back and you're going to be doing this as a loop until you feel like you've narrowed it down to exactly what you want. I'm launching a fund right now. I have done this iteration probably 3 or 4 times. We've gone back, found different types of deals. We've repositioned our team. We've redone our pitch deck probably 3 or 4 times because—

Why?

What helps us the most, 'cause right now you might be sitting there, Bridger, Lincoln, I don't know what to do, I don't know what to put on my deck, I don't know what investors want. Neither do we, okay? We have no clue. You don't, we don't, nobody knows. You have to go and test. This is, every business book you ever hear about, they always talk about market testing. This is your market testing. You go and pitch investors. And you can go to a former boss, you can go to a neighbour that maybe has a little bit of money.

Peers, yeah.

Peers, and you start pitching your grandma, everybody, and you ask them, And I like to make it real. Instead of saying, hey, hypothetically, would you invest? I go, hey, actually, we're looking for money. Can we put you down for, even if it's a small amount, $10,000? And what it does is it makes them treat it seriously, and they'll start bringing up concerns. Well, you know what? I actually don't love your team. I just don't see enough people on here that I would trust you guys. Or maybe I don't love the idea of investing in cryptocurrency.

There's no collateral. There's all sorts of these different risks or problems that they might bring up. And then you know how to address those in future meetings. So kind of a word to the wise is don't go to your biggest fish first, right? Like you don't want to go to your, you know, your most likely investor that's going to put money with you. You want to wait until your, you know, your pitch has been massaged and practiced and articulated. So you know exactly what you want to say, right?

What you'll have here too is as you practice your pitch, you'll be able to overcome objections. a lot easier and think through, 'cause investors are gonna ask you the craziest questions, stuff you never thought of. I had an investor ask me one time, what happens, Bridger, if you die? And I was like, he asked, I was like, I don't know, right? I don't know if I die in a year. And I was like, that actually is a very informed question, it's a good question. And then the next time I got asked that question, I had a, oh, oh yeah, we have this whole thing mapped out and I had it all ready to go. There's questions that you're just gonna over time build up a question bank. Yeah.

Mm-hmm.

That you and your partners, when you're pitching investors, will get better and better and more refined as you go and iterate on this. The worst thing you can do is do this backwards, is go spend the money, you have one idea and you have one fund you're gonna do, and you say, we're gonna pitch, we're gonna either raise $100 million or we're gonna raise zero. And you go out and you pitch investors and you don't iterate, you don't adjust, you don't adapt, And a lot of those funds never actually launch. They never actually make it. They don't end up hitting the pavement because they don't do this iterative process.

So you might be wondering about general solicitation laws and making sure you're compliant there. Soft commitments, as long as this is people in your network that you already know, you're not sending out these blast emails or anything like that, then you're fine to do that, okay? The exception is if you're doing a 506 fund and you're relying on the public advertising exemption, then you You can't go generally solicit. You can't set up a marketing or funnels and all that stuff and try and get— that's not a soft commitment when you're generally advertising that way.

That's a great clarification too. When we say soft commitment, what does that mean? What I mean by soft commitment and what we've done for our funds is I'll go in, I'll ask an investor, I'll say, hey, we've got this great pitch, we've got this great team. I have maybe my deck there and I say, hey, We're not all the way set up yet. This is not filed. We plan to be ready to go in about 3 or 4 weeks to do all this. If everything checks out, if it all comes together, can we put you down for $500,000 for this fund? And that usually pulls out a lot of questions from them.

Mm-hmm.

And it's hypothetical. You're not selling— if you do it the right way, you're not selling security. You're not soliciting securities in that way, shape, or form, and you're grabbing soft commitments from investors. So that's how I do it. And I say, hey, I'm gonna— it's not a hard— this is a soft commitment. I'm going to come back in about 3 weeks with all of our docs done. You're going to have to re-review them and recheck everything, but this is what we're planning on doing in 3 or 4 weeks.

So another way to kind of even if you want to solidify a soft commitment even more is I've seen a lot of investors, you know, it's not an LPA or a PPM, it's no legal document, but they'll draft up just like a little one-pager. You know, it's like they're checking the box that they're an accredited investor and they're saying, hey, I'm planning on committing X amount of dollars on this date, sign your name, you know, and like with a bunch of contingencies. It's not legally binding, but it helps the investor be more bought in, right? If they've signed their name on something, then it's more legit, right? And it's more, more defined. So that, I mean, that, that's something great that you can do. But up to this point, like you haven't really spent any money, money at all.

Right here, bam, $0. Yeah, $0 spent. If you guys remember, I had a podcast episode I launched a little bit ago That talked about 3 weeks and $500, you can launch 99% of your businesses. Give yourself a timeline and a budget. This whole thing you can do in 3 weeks and less than $500, even $0 to get to this point to test out your fund idea.

So after this process, once you've got soft capital commitments, you've proved your concept, right? You've proved your investment strategy, then you go and you talk with an attorney and get your docs filed. Now, and kind of the first step in that is probably setting up your entities.

So with whatever lawyer you choose to use, they're gonna have their whole timeline. They're gonna do— they're gonna help you do all of this. So that— this is when though you start setting up entities, like Lincoln said. This is when you start setting up— once those entities are set up, you can then go and find bank accounts for whatever type you're doing. In this example, we're talking about hedge funds. So we, in other videos, we talked about UBS. There's other banks that you can use there. So you'll set up your entity bank account and And then they will help you draft your LPA, PPM, or operating agreement depending on what's going on. This process typically takes around— very quickly, I think would be 2 weeks to about 6 weeks to get done.

But it can go longer, usually not shorter than 2 weeks, but you— it can go longer depending on the complexity of your offering. Okay, so you want to give yourself a little bit of hedge, and that's why when you're doing these soft commitments It's wise to give yourself a buffer like, hey, end of Q1, end of Q3, you know, this is when we're going to close in the future.

Your lawyers will help you with all this as well, so defer to legal counsel with them, and they're going to help you with your state or country or whatever you're finding. They know the laws better than we do. We're trying to give you a general outline here. This week, actually, I talked to 5 securities attorneys this week on fund structure and documents, how much they would cost and timeline. I got price points anywhere from $10,000 all the way up to $125,000 to set up the exact same fund. And just so you know, that is kind of the range that you're playing with. Now below in the course, actually, we have connections to great law firms that give our students huge discounts because you guys are informed and know what you're doing. When you go to a lawyer and you know exactly what you want and you've done all this, this process, it actually saves you a ton of money. Most of these lawyers are used to How the guys on Wall Street launch funds. They come with a fund idea, they want to launch their hedge fund, they go and pitch, and then they come back and have to iterate and change their fund docs. And lawyers love that, and they just get paid by the hour. And so they love— they do 4 or 5 iterations, and they charge $50,000, $60,000 for fund docs. That's not how we do it. We know exactly what we want. We've done all the work ourselves. We go to a lawyer, and we're— they're just taking orders from us, right? And they can get docs done, usually with our group, a lot faster. than other people outside.

Okay, and then once you have your docs set up, then you're good, right? You can go and raise money, you can solicit depending on your fund structuring and fund type, but that's when you go, you actually get the documents signed and you start running.

This will depend too, and your lawyers will help you with this, whatever state you raise money from, you have to file in that state, but they, again, these lawyers, this is what they do professionally. They will help you in whatever you're doing for your fund, so I wouldn't worry about that stuff. The harder part and the part that you need to worry about is this stuff over here, Step 1, 2, and 3, that's where your secret sauce, that's where you've got to come in and do all the work. The step 4, I would not worry about as much. Yes, in the course we teach you below all the stuff you need to understand what they're doing, but again, you're going to default to legal counsel, and you're paying these guys good money to go out and do this. The last thing I'll note on this cost, okay? Bridger Lincoln, how much should I spend? On a first-time fund, I would say don't spend over $35,000. if it's your first fund, because in a year or 2 when you launch your second or third fund, you're gonna tweak and change stuff anyways, right? So I would stay a little bit cheaper. You don't need to go the cheapest. I probably wouldn't do the cheapest route out there.

Yeah.

And the lawyers that we have below in the course are, we vetted and we think are good partners. You can use whoever you like though. As you get more sophisticated and bigger and have institutional investors, yes, you're gonna want expensive docs. You don't want an investor to not invest with you because your docs were not adequate to their investing standards, but on your first fund, I would stay below $30,000. And then the last thing I'll say is these are reimbursable expenses of the fund. So if you've soft raised $10 million and you spend $30,000 on docs, that's a deduction from the $10 million. The fund pays that for you.

As long as it's defined in your offering documents, right?

Yep, which— and you're drafting, you're paying to draft the offering documents, which is great. That's what you do. So again, to recap on everything we talked about, step 1, again, finding that deal is so crucial, okay? Getting that pitch deck, that framing, that team, that admin all together on the first step is crucial. And you'll iterate and change this over time, and that's okay.

I want to add something there. You may be wondering, well, what if the deal is time sensitive, right? What if I'm going to miss out on this deal? Like, that's okay, okay? Like, if one deal passes you by, then it's not the worst thing in the world. You can still, in your deck, you're going to want to have like, this is the type of property This is the type of company that we're investing in, okay? You got to think long-term here.

Now, something you can do as well if it is a time-sensitive deal, we just did this in our fund, we will set up a side syndication, go and acquire, purchase the deal with a plan to sell it into the fund a few months later. This only works for private equity or real estate type of funds but you— they call it wholesaling properties or deals into your fund, it's another way to get around that if it's a time-sensitive deal.

Yeah.

So back to the review, so focus on that deal. You're gonna structure the deal out, putting together all this stuff, going out and raising money, getting investors lined up and seeing what they think. Do not come complain to me and Lincoln on a coaching call or something if you have not talked to at least 10 investors, 10. And that's gonna be hard, to be honest. Talking to 10 investors is a hard deal, but if you have not talked to at least 10 investors, that is your main focus right now. You should not be coming and asking us, again, I don't know what to do. Go talk to investors. Start pitching your stuff. And then once maybe 10 or 15 investors, then okay, let's talk to us. You can talk on the calls, whatever, and we're going to help iterate and change things to help you get there, but start talking to investors. If you talk to 1 or 2 investors and they don't like it, go back.

Yeah.

You need to go talk to more investors. Don't complain to us that investors didn't like it after your second investor. You need to talk to a good number of investors to get a sample size of what they think of this offering. And then after that, finally, Finding a good legal counsel in your state or area or type of fund. We have good partners again below, and they're going to help you with all this stuff of getting everything set up and getting moving on your fund. So that's it. That's the Fund Formula 2.0. There it is again. Hope you guys enjoyed. Let us know what you think in the comments below.