Bridger Pennington explains how investment funds work: investors pool money, a manager invests it, and returns get split among them. He breaks down major types like real estate, venture capital, and private equity, then describes his group's Black Card program, which has launched roughly 240 funds.
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All right, so the obvious question is, Bridger, what even is a fund? And what's the difference between a hedge fund, a private equity, a venture capital fund, a debt fund, a real estate fund? Like, what do all these funds mean? How do they work? How do they launch, etc.? Additionally, like, how much money can be made inside of a fund? So I want to answer that in this video. So real quick, let's hit that first one. This is actually on Forbes. Look at my computer here. Finance and investments is the top category for the world's billionaires. If you look at the Forbes 100 list, it is riddled with fund managers. It is just stupid how much money fund managers make and if you listen to my story earlier, I, you know, I talked through like I wanted to pick an industry that I could dedicate all my time and attention to over the next 10, 20, 30, 40 years. If I want to get good at something, I want it to be something that has a very long tail approach. For example, if I'm gonna get really good at cooking, if I'm gonna be a really good chef, that's cool and all, but I'm somewhere capped on my income potential, which is fine, that's okay with some people. For me though, I had a pretty big appetite, and I said, if I'm gonna really dedicate my whole life to something, it might as well be something that can pay off really, really well. And funds came out to be that thing. Funds have huge margins. If you do well at funds, It is incredibly scalable. In future videos, we'll talk about the money that's paid out. But I wanted to make that— this is another one. This is the top 10 earning fund managers from 2022. It's a little bit outdated, but I thought it was pretty interesting. OK? Ken Griffin from Citadel made $4.1 billion in one year. Izzy Englander made $3.2 billion. James Simons, $2.7 billion. David Tepper, $2.6 billion in one year. And by the way, this isn't net worth. That's not his net worth went up. Like Elon Musk, his net worth goes up and down based on Tesla stock or whatever company stock. That's not this. This is earnings from one income source. This is not personal investments. Others have— this is one income source where he earns money. $4.1 billion in one year. That's more than, what, $300 million a month? Ken Griffin, a funny story. He was bidding on— I think this is 2023. He was bidding on the one of the original editions of the U.S. Constitution or it might have been the Declaration of Independence. But anyways, an old document like that and the price kept going up $25 million, $30 million, $35 million. I believe they closed around $45 million for this document and everyone was like, oh my gosh, crazy amount of money. Ken Griffin won the bid. It's like, holy crap, that's so much money. All these articles about Ken and how much money, blah, blah, blah. People don't realize Ken Griffin makes $45 billion, excuse me, $45 million working from Monday to about Wednesday afternoon or Thursday every single week. Like that's him working Monday, Tuesday, Wednesday, and then he's, you know, $45 million buying this cool ancient document from US history. It's just like stupid how much money is created by these fund managers, right? So I'm like, if I wanna get good at something, it's gonna be that. Like can I figure out this game? How do I do this? So let me break it down to the most basic sense for you here. Alright, so what is a fund? On the whiteboard here, if you look, all a fund is— and by the way, in our top group called Black Card, in the last 2 years, we've launched about 240 funds. Okay, in 2 years, maybe 2 and a half years. That's about 3 funds a week that we are launching every single week out of Black Card. That's how, like, we've gotten pretty good at this. And we've helped people We'll talk about this in a second. In the real estate business, in the debt business, in the venture capital business, in the private equity business, in the— I'll put it up here— hedge fund business. And I'll talk through in a second what's the difference between all these. What does it even mean? What are those terms? But I just want to let you know the scope of what we've done. So all a fund is is a pool of money. Investors put their money into that pool. People like me and you, I'll call us the managers or the fund managers. We draw from that pool, we go make investments. Whenever those investments make money, I'll put it in green here, the investments flow back to the pool and then get split between the investors and the fund managers. That's it. Okay, when I talk about funds, syndication, all these high finance whatever terminology, that's all we're talking about. Okay, this goes back to ancient days. It's like, hey, I want to set up a blacksmith shop. You get some money from some people. Whenever we start making money in that business, I'll pay you back with the returns of the business. That's all we're talking about here. It's not that complex. One thing I hate about finance people is they make simple terms super complex. So that's all we're talking about here. Now, so then Bridger, what's the difference between a hedge fund or a real estate fund or a debt fund or a venture capital fund or a private equity fund? The differences are what they invest into, the investments they make. So, for example, this first one here, real estate, or second one, real estate funds, they invest into, guess what? Real estate. They are buying properties and single-family homes and other stuff. And whenever those properties make money, it flows back to the pool and gets split between investors and fund managers. Okay. Venture capital. They're investing into early startups. If you guys have seen the movie, the show Shark Tank, all they're doing is they have a pool of money. A lot of times it's their own money, but for a venture capital fund, it would be other investors' money into a pool. They invest into startups. Whenever those startups make money, it pays the pool back and they split the returns. That's it. OK? A hedge fund, instead of investing into private companies, They invest into public securities. They're investing into stocks, bonds, options, forex, crypto, okay? That's a hedge fund. So down below, private equity. Instead of investing into public securities, they buy private companies. They'll buy, you know, restaurants. They'll buy retailers. There's actually a really cool private equity firm on Wall Street called Sycamore Partners. They own— you probably never heard of them, but they own Staples. They own Nine West Shoes, Aeropostale. They were trying to buy Victoria's Secret, I think a year and a half ago. Okay, that's a private equity firm. There's micro private equity where some people in our group are buying up small businesses or scaling their existing business or big private equity. You're buying up half the Strip, like the Las Vegas Strip is all owned by pretty much 2 or 3 companies because they've done private equity or M&A work, mergers and acquisitions. Debt, okay. Debt funds, they issue loans. It's a pool of money. They actually issue a loan like a mortgage or maybe a hard money loan. That's it. Okay, so when we're talking about the world of funds, this is, this is all we're talking about. It's a pretty simple concept, and we'll dive deeper here in the next few slides.
