Why You Don't Need A Harvard Degree To Start A Fund

Welcome back to Investment Fund Secrets. I'm Bridger Pennington. Today I want to talk about why you don't need a Harvard degree to start a fund. All right, so this is something that I'm sure all of us have struggled with in this world of starting a fund. You want to get into venture capital, private equity, hedge funds, whatever it is, and everyone tells you you need a Harvard degree, you need to get the credentials, the experience. I say screw that to all those people. I remember I was a In my first year of college, actually, I was very interested in private equity. I had heard about these just super rich guys, the Carl Icahns, Ray Dalios, Warren Buffetts of the world that ran funds. And I was like, oh my gosh, that sounds amazing what they do. And I remember talking to one of my professors and I asked him, what's— how can I get into private equity? What's the route? How can I do it? And he said, honestly, right now you go to a second-tier school. The only way for you to break into that world Is you need to work your tail off, get perfect grades here. You can maybe land a job at an investment bank on Wall Street, and you're gonna work there for 2 years, probably maybe 3, and you're gonna work 100 to 120-hour weeks for 2 years. No vacations, nothing. You're gonna work your tail off. You're gonna get promoted, and then hopefully, if you're lucky, you'll get into an MBA school, and you can go to Harvard, you can go to Stanford, maybe a top 5 school, and only then you'll maybe get recruited as an entry-level guy into a private equity firm. That's your path for the next 10 years if you wanna break into private equity. And then after that, you can move up in those private equity realms, and then maybe in 20, 25 years, you can actually start making executive decisions on investments. That's the route. That's the way to do it. I remember hearing that and then comparing that with my dad's story. So my dad currently, if some of you don't know, he runs a $15 billion, that's B with a billion, dollar private equity fund. Just to put that into perspective, Grant Cardone, as everyone knows online, Grant Cardone, I love Grant Cardone, I think he's a great guy, That's about 15 times bigger than Grant Cardone and they do the exact same thing. They buy apartments, multifamily, commercial office buildings, that whole thing just like Grant Cardone does but they've just done it 15 times bigger than Grant Cardone. I mean, it's just massive, right? And I look at my dad's story though and he didn't do any of those things that college professor had told me. My dad grew up in North Las Vegas, that's the ghetto part of Las Vegas, went to a second-tier college. In college, got married, had 2 kids. He would go to school full-time and then work full-time at night doing sprinklers just to support his family. Got out of college, he'd started a few businesses, kind of hopped around, and one day he's at a networking event with a bunch of people. These 2 guys roll in and they're both driving Porsches. He's like, whoa, and there's these 2 young guys, they hop out and he meets them, talks to them. What do you guys do? What are you guys doing for a living? Oh, we run a fund. He goes, a fund? What are you talking about, a fund? What's a fund? And they went on to tell him, a fund is you get money from other people, you put into a pool, and what they were doing was buying real estate assets just like Grant Cardone teaches you to do, right? Buy multifamily properties. They were taking those and they were developing them and flipping them and doing all sorts of deals with those things. My dad said, that is so impressive what they do. He's like, I could do that. He just had the dumb confidence to do that. He'd never been told by a college professor or some other person to— you can't get into private equity, you can't do it, right? So he's like, I'm gonna do that. So he gets on Google, he starts researching, he starts talking to people, and he said, you know what, I don't know how to invest. That's how I felt. I didn't know where to put people's money. And then secondly too, where am I going to find the money, right? That's what— and we'll talk about in a future episode how to find investors. But he said, I'm going to figure this out. And so he calls one of his buddies that was well networked, and he said, hey, you want to start a fund with me? He said, what's a fund? And so they talked through the fund. He said, yeah, I can get you— we can start doing that. So they started to raise money, and he connected a guy he met that was really good at raising money. He said, what are we going to invest in? He said, okay, let's do real estate. Real estate's hot. Now, this is back right before the market crash. Everything was going up, right? They found some real estate experts that were amazing real estate guys but just never had enough money to do real estate, and he connected the 2. And so he had a partner that was really good at raising money. He had a partner that was really good at doing real estate. He connected the 2 and he said, I'll be the fund manager. I'll manage the accounts. I'm good at, you know, I can just figure it out. I'm just— I can do books. I can— I'll figure out anything I need to do to just be involved with this, with with you guys. And so they formed this company. Long story short, they rode the market down. They actually did a really good job of raising money and have ridden that market since it crashed all the way up and made a ton of money on that market ride. Now, like I said before, manage $15 billion, have over 2,000 employees, and have grown like crazy in this fund scale. He did it without any— still, I asked my dad about real estate, he has no idea. They own $15 billion of real estate. He's like, I don't know much about real estate. My partners know a lot though. And And I asked him, do you know a lot about raising money? He's like, yeah, I know a little bit, but my other partners over here know about raising money. I just know how to run a fund, the fund structure and administration. And that's what I'm trying to teach you on this podcast. So if you're sitting there like, yes, I want to start a fund, but number 2, I don't know how to raise money and I don't know where to invest it. There are plenty of broke geniuses out there that are amazing investors that have no money to do it with. Great example, one of my buddies. He's done 4x trading for the last 5 years and has about a 91% hit rate on his trades. I mean, for the last 5 years, he's done incredible. But he's managed— he took— he started out with $25 grand, turned that $25 grand into $50 grand, and turned the $50 grand into $100 grand. And now he's got, you know, $200 grand he manages, which is great returns but not very much volume. I talked to him, why don't you start a fund? He said, I'm working on it. Anyways, we talked through it, and right now he manages just over $35 million. Million euros. So instead of turning 25 grand into 50 grand, hopefully he's gonna turn in 30 million euros into 60 million euros. Taking a 2%, maybe 4% gain on 30 million is a lot more than 100% gain on 25 grand to 50 grand. And he's doing super, super well and set up all these deals. And that you can leverage that into bigger and bigger deals. Another great example is a friend of mine, real estate investor, done tons of Fix and flips. Seriously, he's amazing at it. He'll buy a house for 50 grand, build it up, fix it, and sell it for 75 grand. Makes 25 grand a pop, which is awesome. And I'm like, dude, why don't you do bigger deals? Why don't you start— instead of doing a 50 grand house, why don't you do like a million dollar home or a 5 million dollar home? That's a good idea. And he recently just started his own fund as well, manages about $20 million that he can now— he can just pull And put right into investments and do his own deals and has no capital restraints. So, if you're sitting there thinking, man, I don't have the know-how, you're right. You don't have the know-how. You don't have the Harvard degree. But guess what? You can find the person who's been networking for the past 25 years. Just find them and bring them as a partner. Find the person that can do real estate, bring them as a partner because there are so many people that want to start a fund out there. It's like everyone's secret dream is like, oh man, one day I'll start a fund. Guess what? You have the know-how and tools to go out and help them start a fund. Thanks. Yo, if you're just starting out, you probably have a lot of questions. That's awesome. I want to hear them. So please go to investmentfundsecrets.com, submit your questions, and if I like your question enough, I actually want to bring you on the show with me to ask those questions live to me, and I'm going to bring on another investment fund manager to answer them for you. So If you're interested in that, please submit a good question on the website. Again, that's investmentfundsecrets.com. See you there. See you there.