The #1 Thing to Focus on When Starting an Investment Fund (IMPORTANT)

Hey, hey, welcome back to the show. Today we're gonna talk about the number one thing you should be focusing on inside of your fund and your business, to be frank, about what is most important. Inside of business entrepreneurship, there's a lot of things you can focus on, and actually myself, so when I first started out, and you guys, some of you have heard my story, in college I started 6 businesses my first 2 years of college. And in that trial and error shotgun approach, I actually learned a lot of stuff, and I started to read a lot of business books, And what was interesting with a lot of, almost every actually entrepreneurial book I read, they all talked about the same thing. And they didn't talk about the traditional, if you go online right now you can read blog posts, whatever, I was just looking at a few of them just barely, they talk about getting nice business cards together, getting your logo, getting your marketing materials together to hand out at events and stuff. They talk about all this other fancy, getting your entity set up, legal formation. There are a lot of things that you can waste or spend your time working on when launching a business and I would say sorry about this but most those blog writers out there writing those little blogs have never even started a business on their own, right? They're reading other blogs, they haven't figured out and I finally went through and I read some entrepreneurial books and incredible resources from people that have actually done it and guess what? They all said the same thing and you guys have heard this before that the number 1 thing you should focus on, I have it written on my board right here, is your, I call it your OSS, your optimal sales strategy, or just sales, right? How are you gonna make money? Your job as the CEO, as the founder, whatever it is, is to make the money rain, right? Make it come in, okay? Sales is your number one job. Yes, you need to focus on fulfillment and making sure the product's there and stuff, but sales is way more important. There's a great story I love about this strategy of focusing on sales first and actually comes from Sears, you know, Sears department store. So, Sears was founded by 3 guys, Richard Sears, Alvin Roebuck, and Julius Rosenwald. Sears was up and running, they would send out catalogs each month to their database, to their list, and people would order off the catalog and they would ship something to them from the Sears catalog. It was like the big thing of the day. This is before any other type of marketing before this. And in one meeting, the 3 founders got together and they told Richard Sears, they said, hey, we need to slow down sales. We are getting so many orders, we can't even fulfill the orders we have from last month. You cannot send out this catalog and they were planning another launch, another promotion, all the good sales stuff they would do and Sears said okay. He goes what's the factory production? He goes we're at 110% right now. The fact we cannot produce any more stuff and what Sears did and I don't know the exact conversation what happened but as the story goes, Sears went out and he put out the Best catalog they've ever seen. He put out biggest, bigger promotion, sent it to more people than ever. He came back and his two other partners were pissed at him. Like, Richard, what are you doing? Richard Sears, why are you selling more? We can't even fulfill the orders we have. And he came back and he said, if the sales come in, if money comes in, we'll figure it out. We'll figure out how to fulfill on these orders. And sure enough, they did, right? They figured out how to fulfill on the orders. Because the money was already in, they could go hire more employees. They could build a bigger factory. They could fulfill because they focused on sales. You never ever slow down sales to make sure you can fulfill, hopefully, and that's the story from Sears, right? So today I wanna talk to you guys about the optimal sales strategy, what you need to do inside of your, and this could be a business, but specifically we're talking about funds today. What does this mean? Typically for funds, there's kinda 2 assets, but typically it is investors. It is selling investors, investors and money. Investor money flowing in is the lifeblood of your business, and you or your partner, some key person in your business, and it should probably be you if you're starting a fund, should be dedicated to this concept of how do I raise more money? How do I get more money in from investors? What is my optimal sales strategy to do that? So in this episode, I wanna walk you through 4 different things that you can use to improve your optimal sales strategy. Okay, so the first thing we need to talk about is where are my customers, right? You could have the greatest product, the greatest fund, the greatest idea ever, but where are, it doesn't matter unless you have investors, unless you have customers, or I'm gonna call them investors or customers, okay, investors to put money in, right? And the thing you gotta understand is we need to go to where the investor's at. The old phrase of build a mousetrap and they'll build it and they will come or build a better mousetrap and they'll come, that is true to some extent but in most cases, you need to take it to them and go to find customers. A great example is if you were in a, let's— I don't know, an old Middle Ages kind of place and you had a great product you wanted to sell, you had this awesome little thing you were going to sell to the whole town, where would you go to sell it? Well, you would go to the town square. You would go park your cart right in the middle of the town square. That's where everybody's already at. They're already there and they're ready to shop, they're ready to buy. That's where you go to sell. You wouldn't sit on the outskirts of town with your little cart. You would most likely go into the town. So where are your customers? Where do they hang out? And in our case, it's very interesting with investors. You are looking for high net worth individuals, for people with a lot of money that are looking to deploy into alternative investments, into funds like ours. They can take a chance on an emerging fund manager with a cool idea that can get them a big return big return, where do these people hang out? And we have entire videos and sections dedicated to this exact part, where do they hang out, but typically these investors are hanging out in a few places. Number 1 would be investor clubs, okay? There actually are investor clubs, angel groups, there's seed investor rounds, there's alternative investment, they set up groups where you can come and pitch them for your fund. They're hanging out at high-level charity events, they're hanging out at exclusive clubs, the Ferrari Club or Porsche Club, they're at political fundraising events. And typically what I would say here, I know it sounds boring, But when looking through a lot of entrepreneurial training and stuff like that, actually where you go here is copy what everybody else is doing. I know it's boring, I know you want to be unique, I know you want to go find a new customer in a new niche but just copy what successful funds are already doing. Just like back to the example where you would put your cart into the town square, you would copy and go to the same market that's already there. We've talked about this before, the red ocean, blue ocean. When you have a blue ocean, you market to the red ocean. You are grabbing people out of the red ocean and bringing them to the blue ocean. If you set up a blue ocean out of nowhere with no customers, it's definitely a blue ocean, but no one knows about it, right? You go back and copy. I think the best way to do it is just copy what other successful funds are already doing. How are they finding investors? Where are they going to harvest these types of leads? Okay, so that's number 1, where are my customers at? Number 2 is what product to sell. Now we talk about this a lot in the Fund Launch Formula, and our product in our case is an investment thesis, is a strategy that we can go out and find a blue ocean or a niche that we can get an alpha type of return, a return that can beat the market hopefully, or in some way, shape, or form improve their investment portfolio. That is the product we're going to sell. And what's unique to funds specifically is more on this part is who is selling the product. A lot of times investors are going to bet on the jockey, not the horse. They want to see you and your management team. How are you going to go about that product? Because in reality, a lot of the products we're selling to investors are they've heard it before in the fund space. Yes, I've heard of a crypto trading strategy, I've heard of a real estate multifamily value-add fund, I've heard of a venture capital fund. Yes, you're gonna have your tweak to it and your blue ocean and your little niche to it, but a lot of times they're looking at, yes, what's the product, do I think that's an opportunity, do I like the market space, but also do I like the team that's surrounded around it? We talk about that in a lot of other shows. Okay, I wanna move on to 3 and 4. So number 3 is how much do I charge? And in our case, usually it's management fees, preferences, Carried interest, stuff like that, that we're charging to investors. How much do I charge? In the fund space, we've talked about this previously, but a lot of funds do the 2 and 20 model, 2% management fee, usually like an 8% pref, 20% carried interest, somewhere around there. And that will be determined, I think, by number— and I'm running out of room here— number 4 down here, how to convince them to buy or to invest. That's the crucial ticket right here. And this Question, how to convince them, sorry, I'm running out of room here on my whiteboard for people that are watching the video. Okay, how do I convince them to buy? We'll come back and might tweak a lot of these things. In the Funnel Launch Formula, we are essentially helping you set up your optimal sales strategy, your OSS, right? Back to the Funnel Launch Formula, number 1 is find an incredible deal. 2, frame that deal out, put it together, maybe put together some what you're gonna charge, and then 3, go and pitch investors. And this is the 4th question on how do you convince them to buy. And we have a lot of training that goes through on how to meet investors, how to find them, how to convince them to buy. But in my experience, a lot of the stuff, it just takes experience to do it. It takes you going out and having 10, 15, 20 investor pitches and sitting down and having— maybe it's you and your partner and you have your pitch deck together and you're going and you're pitching and they're going to ask you feedback questions. They're going to ask you, why did you choose a 2% management fee? Why did you choose that area of Dallas, Texas to invest into? Or why are you trading on the New York Stock Exchange, not another exchange? And you're gonna build up a database of responses to these questions, to these objections of the sale, right? They're bringing up objections. Well, why should I bet on you guys with your track record? Why should I want to invest some of my portfolio here? How are you guys gonna find alpha? These are all different types of objections, whether vehicle-based objections, internal objections, or external objections. They're going to bring up to poke and try to prod and find anything to do with your fund because there's a lot of money at stake here. And actually in future episodes, I'm going to walk you through deeper on how actually I pitch and I'll walk you through my exact script and what I do. But how to convince them to buy, I've developed that because I go out and make the phone calls. A lot of us, and I love the rule of 10,000 hours, we think we're going to show up to the first investor pitch and just be able to just Wow them with our product or wow them with our management team. In reality, that's not the case. You need a mix of all of these. You need to first off go and find where the customers are at, find where the investors are at, have an incredible product to sell, have your fees and your team built out together and then apply all those simple basic, I know it sounds dumb and you're like, oh, these people are sophisticated, I don't need to sell to them. Good salesmen typically are on the top of big companies and a lot of MBA programs won't teach you that. 'Cause sales is such a dirty word and selling is so, oh, I don't wanna be a salesman when I grow up, but in reality, most CEOs, most founders, their primary role all day, every day is sales, is sales and marketing, is all they do. And they don't do it themselves maybe, but they focus on it and they are the one that watches over it because that's what drives growth, that's what drives revenue, and you need to do the same thing. And so a lot of these people that you're pitching to also, are really good salesmen. Have you ever noticed, if you're in the sales business, I do a lot of selling and sales and stuff, I appreciate and love good salesmen. And don't throw away all of any sales tactic and just think, oh, I need to pitch like an analyst, okay? Use those same sales tactics, urgency, scarcity, use all, that's what goes in. I have other episodes we talked about fund managers are really good marketers. They're good at marketing, they're good at sales. They have to be To convince people to put in millions, tens of millions, hundreds of millions of dollars into their fund, you've got to be a pretty dang good salesman or someone on your team and hopefully it's a part of you. You're going to still have to go on the sales calls to help land and convince those people to buy. So something, and back to the original question, what should I focus on when starting my fund? There's a lot of things to focus on. There's legal, there's compliance, there's partners, there's infrastructure, there's all this kind of stuff. The number one thing to focus on in your fund is your optimal sale— is sales, optimal sales strategy, your OSS. If you can figure out a good way, just like back to the story of Sears and his 2 partners, if you can get money in, guess what happens? If you get a check for $10 million for your fund, guess what happens? You can go hire the lawyers, right? You can go hire the compliance guys, you can go build the systems, you can figure it out. Having that investor money is the lifeblood blood of your fund, and you need to take that very seriously when launching and scaling your fund. And people aren't gonna just dumb, you know, put money into your fund, obviously, right? You need to have a background, you need to have a great deal lined up. That's why we teach you guys that in the Fund Launch Formula. We have this whole show and program, and that's what we do is to help build the infrastructure around it. And what that does though is that that is directly correlated to how much investor money you get in, and it's how well you can present and pitch and how sound your investment thesis is. So it all ties together. So if you're thinking about my investment thesis or how I'm gonna pitch, it all is tied together. 'Cause the more sound and waterproof your investment theory around on this step number 2, right, what product do I sell, how tight that investment thesis is, helps so much when you're pitching and raising money from investors. It all goes into this sales. And once that investor money comes in, ta-da, right? That's the lifeblood of your business. Everybody, your partners wake up, they're busy. Hey, I'm working hard tonight, I'm gonna work late tonight. 'Cause they can taste blood. I always talk about that. When you can get your teams to taste blood, taste money, right? When they see the money, they can sniff the money right in front of their nose, like man, it's right there, we're almost there, everybody works harder. That's how companies take off like a rocket ship, is when employees and partners and yourself can taste the blood in the water, and that happens by sales. So the number one thing you should work on is getting, is selling investors. And using the Fund Launch Formula is getting started as quickly as possible. The MBA, Harvard guys, they're gonna focus on legal and they're gonna focus on setting up the structure of it all right and everything. We're gonna focus on getting the job done. Setting out an incredible deal, back to the Fund Launch Formula, framing that deal out and then pitching investors, getting the money in. And then from there, once we have soft commitments, then you can go figure out legal, you can go figure out compliance, you can set up your investment advisor, broker-dealer, whatever you need to set up, it all becomes a lot easier and you have proof of concept already. You don't have to go waste $100,000, $200,000, $500,000 on other expenses and building infrastructure before you have sales in. That's why this is so crucial. Work on your optimal sales strategy. I'm going to have other episodes that walk you through more in depth on how to actually pitch, how to go about this, how to find those investors. We have actually other episodes in the past you guys can see as well on all this, but this is what you should be focusing on. This is what you should be thinking about all day, every day. How do I increase my sales? Especially at the startup level. If you're under $2 million in revenue on your fund, and that's just top-line revenue, you need to continue to focus on sales and getting investors in and getting that, that is the lifeblood of what you're doing. Alright guys, that's what I got for today. Focus on that and a lot of things will fall into place. Thank you guys. If you have questions or comments, message me on Instagram or LinkedIn or whatever. Like, subscribe, comment, whatever it is on this page. If you guys can give us a review, that would be awesome. Thank you guys so much. See ya, bye.