How to Find, Vet, and Invest in Private Funds with a SDIRA (ft. Bridger Pennington)

Welcome everyone to the Directed IRA Podcast. This is Matt Sorensen and I have a special guest with me today, Bridger Pennington. I've been following him for a while and excited to have him on the show. We're going to talk about how to find and analyze private funds. I know so many investors out there are bored with the stock market, hasn't been performing great this year so far. You're thinking, how can I invest in private assets, maybe a private I happen to have an expert on that here, Bridger Pennington. He is founder, CEO of Fund Launch Live. He has his own private fund as well on top of that, but he actually teaches people how to raise capital, how to optimize and start a private fund. So Bridger, thank you for coming on this show today to share your expertise.

Yeah, Matt, that should be fun. Thanks for having me on.

All right, well, let's get started. And I think a lot of people are kind of familiar with the private fund. We're not talking about a mutual fund or an ETF. We're talking about a non-publicly traded fund. And so many people here like to invest either with their private dollars or with their self-directed retirement account. As you know, a directed IRA. Many of our investors here are actually using their IRA to invest in a private fund. But what would you say, like you get that conversation a lot, probably, Bridger, of people like, well, what the heck is a private fund? And like, what should someone know as an investor that's, that's never done it for the first time?

Yeah, let's, let's start high level. Uh, you know, why, why even approach a private fund? Like why even do this? So there's public offerings like a stock market, like you mentioned, bonds, stocks, these are public assets. There's a lot of private assets as well. So like think about buying into Anthropic or Stripe. These are privately held companies. You can't buy into Anthropic. You just can't. It's a private company, but there are sometimes vehicles or funds that have bought in the past or will buy in the future that you could sometimes come through that vehicle into these— that's one example— into a business or into real estate, into private credit, or these alternative assets.

Yeah, I think, uh, let me say, as a good couple good examples there, I think the news just released SpaceX is going public now. It's official. But a lot of people had already invested in SpaceX, right? And they probably did it through a private fund.

Yep, they got in early. And then, then it's gonna— what, the IPO is going to be, what, a trillion? 1.5 trillion?

It's gonna be an insane amount.

It's crazy. It's unreal. It's like, well, that's a lot of equity value if you invest listed at a $100 billion evaluation or $10 billion, right? So now my background, I run two of these private funds right now. So to give context, I run a about $25 million crypto private investment fund. We do investments in crypto. We also have a GP stakes fund. I can break that down a little bit later, but we do investing into private markets. Then through FundLaunch, we've helped launch about 450 of these private investment funds. So typically what's happening when we go and help someone launch a fund is they are an expert in multifamily real estate and they have bought all the deals they can do with their own money. And they said, we have, man, we have 50 deals we could do in the Southeast United States. Let's go raise a fund of $200 million of investors' money, sometimes coming from IRA accounts, and let's go buy $200 million of multifamily real estate. As that portfolio grows and does well, we'll split the returns with these investors. And so what you were doing with private investment management, you are selecting usually experts in a field. Like multifamily real estate in the southeastern quadrant of the United States. And they are— they live, eat, sleep, and drink that asset class. You come and invest in that, and that's what you're getting access to. And so most asset managers are very specific. They're very niche, they're very narrow, they're experts in a field. And so we can talk more about how to— manager selection is a great topic. How do you find— because there's lots of them out there, which ones are good, which ones are bad. But that's the idea of a private investment fund.

Yeah, and I think a lot of people are attracted to that. One, I think, you know, publicly traded companies have gone from 8,000 down to 4,000 over the last 20 years. We have decreased the opportunity to invest. It is cut in half because nobody wants to go public anymore. And this is real estate businesses, this is technology companies, this is across the board. And so how do I get access to these other investments? I don't want to go run the business. Like I'm not going to go do a multifamily deal or own a mobile home park or buy a commercial office building, but I want to participate in that asset class. And I think that's how the, the private fund lets you get in and someone else is doing the work, right? So, so if— explain how that works though. I'm an investor, I don't really have a say in what's going on. I don't have a job either. So how does that work for the investor though?

Yeah, well, this is— anyways, and the actually the, the great thing about private funds, so there's the, the general partner limited partnership. You would be a limited partner investor into these funds, you are limited on your liability. You're also limited on your decision-making. So, like, for example, I'm an investor in 2 real estate funds. Like, I run 2 funds and I also invest into funds. I don't know real estate. I want to— I don't want to deal with termites, tenants, and toilets, right? The 3 T's, right? The terrible T's. And so I give them— I gave them a quarter million dollars into a multifamily investment fund. I don't make any decisions. They make all the decisions, they do all the leverage. The most I can lose is $250,000. Even if they get a lot of leverage on the business, it goes like goes under whatever. I, I only can lose $250 grand, which is good. I'm limited to my liability, but I also get to participate in the upside as well. Now, fees. Most funds are using like a usually a 2 and 20, which would be a 2% management fee charged 2% per year, 0.5% per quarter, and then 20% of the gains. So again, take my— I put a quarter million dollars in, they're going to charge me 2% per year as a management fee. And then as that money grows, $250,000, let's say doubles, they're going to take 20%, which is called carried interest. And that's how fund managers make fees. So fund managers make a 2 and 20, 2% management fee, 20% carry, and then I make the rest as the investor. But I didn't have to— honestly, all I have to do is get a K-1 at the end of the year and just file my taxes, which is a pretty Anyway, it's a good symbiotic relation. It's why funds, private funds, is one of the most popular business models in the world. It's the number one asset class of Forbes. The Forbes billionaire list is people that run funds. It's a great way to get exposure. I actually read a report from Goldman Sachs. They surveyed all these family offices that work at Goldman Sachs. Only 4% said they would decrease allocation to private funds. 48% said they were going to increase allocation to private funds in the following year. So, and then that would be 96% say they would stay the same or increase. Right now, about 50% of family office portfolios are in private investments, just like this private funds, private investment vehicles. So it's a huge piece of family offices and large families' wealth because of the amount of alpha that is generated from them.

Yeah. And we're starting to see kind of more of the mainstream Americans getting into private funds. It did used to be more traditionally like the ultra-high-net-worth people, the family offices, and there's some securities rules on why that has traditionally been the case. But you're starting to see even the funds, even a lot of the bigger funds are coming down and saying we want to get money from what they call the retail investor. That means, you know, not uber-rich. That just means you have some money to invest, you know, in like, you know, Wall Street speak at least. And so What are you seeing there and the opportunity of like, I'm an individual investor, I don't have a family office per se, but I'm an accredited investor, make a couple hundred grand, a few hundred grand a year, or I got a million-dollar net worth, which is one, you got to do one of the two to be an accredited investor. And, you know, I'd say 70%, we've surveyed our audience at Directed IRA as accredited investors. So how do I get access to those private funds? Like, Can I get into any fund? And also I want to talk second about like, how do I find these funds?

Yeah, so a couple of questions bucketed there. Yeah, you have accredited investor rules. Let's say everyone's accredited here. Some funds only take qualified purchasers, which is the next tier up. You have to have $5 million net worth, not just the $1.1 million, which is an accredited investor. But let's say regardless, you qualify for private funds. I'll just— I'm not giving financial advice. I'll just tell you what I do. Even when I had like no money, I was just starting out, like just getting going. I tried to treat my own family like a family, like a mini family office.

I'm like, I got to talk about it.

Yeah, I got $10 grand to my name. I'm going to treat it like a $10 grand family office. Right. And so I, over time, I said, I want to get allocation these private funds. So how do you do that? Right. How you mentioned, like, how do you actually, number one, find these funds? There's a rule from the SEC for 506(b) funds. They cannot publicly advertise their funds. This is why you don't see, you know, commercials for Blackstone or KKR or Sequoia. Like, they actually legally cannot advertise their funds. Now, there's some new rules that have come out, 506(c)s, that allow new funds to advertise a little bit, but most funds do it through a more private offering.

Yeah, that was called the PPM, Private Placement Memorandum.

Yeah, they used to say it. So anyways, it's a private offering. That's besides the point. How do you find these deals? Right. So What I'll first tell people, there's lots of deals. Like just because you don't see them every day, don't just say, oh, I found one real estate deal in Arizona and it must be the best one. Like go do a family office approach. Family offices or big institutions, they'll look at 100 deals to do one. Like literally our fund, Fund Launch Partners, we had 2,000 inbound deals we looked at and we did 14 of them. That's our funnel. Okay? You should do the same thing with you. So, if you're like, I want to get access to crypto, which is like my fund, don't just invest in Bridger because he's a nice guy. Go, let's like go on social media, find, go on the internet, find 15 crypto funds, and then distill it down to 1 or 2 that you want to allocate to or name the asset class. That's how a family office would approach it. So, sorry, I'm getting back to it. There's lots of deals. Just put that in the back of your hand. There's lots of deals. There's also lots of money. You got to start telling yourself that. Now with like Perplexity, Claude, there's lots of tools that actually can find these deals faster than others. There are certain tools like PitchBook or others that find asset managers. Sometimes it's— but if you're the investor and you start telling people like, I have money, I want to invest, I promise you deals will start finding you. Just start telling people, I am looking to allocate $100,000 into real estate. Let me know some operators in the area. I promise you some money will find— or some deals will find your way. But again, be slow to invest. Look at a lot of deals first. And I can, I can go a little bit how we underwrite deals if you'd like, but that's how that starts. Yeah.

No, I think to kind of distill what you said there, how I think about it is if I'm out there trying to find deals, I got to go big funnel at the top. I got to frickin talk about it that I'm actually wanting to invest. You're going to start attracting things and people and conversations. Use all the tools available to you on the internet, AI, to help find those deals. Go to networking events like, right, get it, get a big enough funnel channels so you can get the inbound and start to learn about these things. Because they're not like— it's not like a ticker you're going to go to at one broker-dealer website. It's not like on the shelf you're gonna go pick out somewhere. All right, you got to do a little bit of work here. I was going to say, like, investing in private assets is kind of like hunting, not farming. Most people in the stock market are just farming. They're just like, it's just there, you pick it up, you harvest it, you know, you plant seeds. But like, private funds and private investing, you got to go hunt. And find this stuff. And but then I like how you said, and because this is the diligence stuff I wanted to ask you anyways, is you got to distill it down then to be like, well, I'm not going to invest in all of these and I'm definitely not going to invest in the first one I find. You got to start having some conversations and then distill it down in this funnel concept to, all right, now I might allocate to 1 or 2 of those where I actually throw some money in, whether it's personal funds or funds for my IRA. And, and I think you're going to have a better success rate in that approach. But what's your experience? I know you said you've invested yourself. Like, I'm just curious, like, what do you think, like, the amount of investors that you guys talk to and maybe track this, I don't know, or even in your community, Fund Launch Live, of like how many people do they need to talk to to get an investor, like an interested person versus invest money?

For— from the fund side?

Yeah.

Yeah. You're talking— I mean, each, you know, it's a funnel as well, right? Of investors. I think, you know, we have a pretty high close rate to my funds. Like most people we talk to actually invest, which is kind of— all right, that's good. I don't know, I would say 75% of people that pitch end up writing a check, which is kind of crazy. Some funds, maybe it's 50/50, some is 25%, but that's who we're pitching, like doing a formal pitch to once they see all of our stuff. People that we're talking to, it's a wider funnel from there.

Yeah.

Back to the original question of, you know, if you're in the investor's shoes now, distilling this down, so many people and myself included, but I'm in the fund space, you see this a lot, just invest with their brother-in-law because he's a nice dude and that's the only deal they looked at. And then there's a scam or the money isn't managed right or whatever. I'll give a tip of just— this has saved me from so much trouble because once you start telling people, oh, I have money, I want to invest, you're going to have every great deal and bad deal come your way and how like a simple litmus test that I do that has saved me from so many scams. I actually had a friend, he's actually investor of ours. He came to me and he's like, Bridger, I've— he had a bunch of money invested. He goes, I've done 11 investments. All 11 turned out to be not what they promised. And I was like, wow, that's a bad hit rate, right? Like he's like, and he invested. He's like, you're— you guys are number 12. You guys are the only one out of my— I did 12 investments. I did 12 total. 11 were not good. He's like, your guys are the only one that was like stand up. And then he was like, how did you guys— because we got pitched the same deals, those 11. He goes, how did you guys avoid these 11? And I was like, oh, it wasn't that hard. Like, there's two main things. Number one, do they do annual audits? Do they have audited financials annually? And is it part of their process? And can I review last year's audit and the year before that's out? If they say no, or we don't do audits yet, or hey, I'm pass, I'm a hard pass. You're too early for me. You know, it's, oh, we're too small. We're just doing a little deal down the street. We don't do audits. Well, sorry, if you don't do audits, I don't work with you. Bernie Madoff, 30 years, never did an annual audit ever. And it took another firm to turn him in to the SEC twice before the SEC looked at him. You know, and then after Bernie Madoff, about, it was like 10% of firms did audits. 90% of firms did audits after Bernie Madoff. It's a standard practice. You can pay for them. Make sure the people you're working with do audits. It's an easy litmus test. All these scams you hear about, 99% of the times they do not do annual audits. Second one, do they have a fund administrator? Hmm. So this is not just a software like AppFolio or something. It's an actual full fund administrator.

Yeah.

These are people on the back office that help manage and cross-reference money, checks, wires, everything. So those are my two, like, right at the beginning. Do you do annual audits and do you have a full fund administrator? Not just software, a fund administrator?

Yeah.

If they answer no to either one of those, it's a hard no for me. That'll save you. I don't know why I got balloons on my screen, but there we go.

That was awesome.

That'll save you from a lot of headache of just a simple due diligence. And then we can get into manager selection from there. But man, that saves so much time when, when sifting through good deals versus bad deals.

Yeah, I love that.

That's good.

That's really good advice. And, you know, I go to a lot of institutional events and where there's a lot of private funds there are people in industry. I was just at two, Alt LA and FactRight, that was here. One was in LA, one was in Scottsdale. And these, these are private funds that go and raise capital from the wealth channel. So they're going to financial advisors saying, hey, put your clients into this. And those two things are like— that you can't even get in the room to talk about your fund if you don't have an audit and you don't have a fund administrator. They are not even going to talk to you. And because they know what you know, Bridger, they know that that, that is some third third-party trust. I shouldn't— well, maybe trust is the wrong word, but it's, it's a third-party check that, you know, someone else is looking at this. Um, and also it shows a little bit of professionalism, I think, and commitment to what you're doing, that you're going to have these professionals there, um, uh, that are, that are looking at things and giving investors back information that's, that's, um, unbiased, I should say.

So yeah, I would say that's the bar, like the first bar to just leap over if you're selecting managers. From there, okay, we're over the bar. Yeah, we do annual audits. We have a third fund of measure. Great. What's your motives? How much skin in the game do you have? How much capital are you guys putting into the deal? I want to see where are we aligned with incentives? Are they running 3 other side businesses and this is like a 4th business that they're kind of doing on the side, or are they— this is their career and they have millions of dollars of their own money in it. Okay, great. We're aligned. I want to see true alignment with managers. Now, you can do a lot of things. On our fund, we look at previous track record, the team around that person. Do they have dead bodies in the closet from previous things? Are they pretty clean-cut in their past? We do— this is crazy— we do personal balance sheet reviews with these managers. Now, I don't know if they would allow you to do that, but since we're partnering with them, we actually go through their personal— we want to see how leveraged of a person this manager is or isn't. I want to see their process. Okay, you're looking at multifamily real estate. Show me your investment process. Are they looking at 250 deals and selecting 1 or 2? And why did you select the 1 or 2? And can you show me an investment memo and the process and the team and the notes from the meetings you guys had? I want to see all of it. Can I come to one of your investment committees and actually sit in and hear how you talk about deals? Now, they might say no to some of those requests, but Those, that's the level. Like, I'm just giving you a few things you could do. These are sharp questions that you can ask. Uh, walk me through every fee that you guys collect and make, and when is it collected and when is it made? Uh, do you make all the fees up front? Do you make them over time? Again, I want to see, are you aligned? I saw a fund manager, um, they, they pitched a 2 and 20 fund. Yeah, we're 2% management fee, 80/20 split, which is standard. If you go read their docs, what they were doing was a 2% management fee front-loaded 5 years. So they would take 5 years times 2, which is 10%, and front-load it into year 1. So when you joined the fund, you paid essentially a 10% fee when you joined the fund.

Wow.

Which was pretty interesting, right?

Yeah.

Yeah.

Nice way to say it.

Yeah. I mean, I did not like this at all. And they pitched it as a 2 and 20, but, and I had friends that invest in this thing and I was like, did you guys read the documents? Like, oh no. And I'm like, did you guys know it's a 10% haircut when you join this thing? Like, oh, we didn't know that. And I'm like, oh, just read the docs. I mean, nowadays we have ChatGPT and Claude that'll read the docs for you.

Right.

And point things out if you want. But, uh, so I'm getting, I'm giving you ideas. If someone's listening to this of just, you get over the bar and then you're asking these kinds of follow-up questions, motivations. How are we aligned? Show me your process. I want to see every little level of detail that proves, wow, these people are absolute experts in this field.

Yeah.

And they— I showed up to their— wow, I listened in on their call or I saw their meeting. These guys are meticulous. These are true professionals that I could trust a large chunk of my money with. They're not just taking a bro-bro hangout like they're really, you know, doing a great process.

Yeah. Well, so many awesome tips there. Okay. I want to try to flesh these out more because these are great tips that, you know, I mean, I've been doing this for a long time, Bridget. These are awesome tips. And as a lawyer, I've reviewed so many documents and the devil's in the details, you know, and I kind of don't— I think it's a red flag for me when they say, oh, it's 2 and 20. And if they like frontload fees like that and they didn't communicate that to you, like, I got to go do the work to find it. A lot of times if I'm like reviewing something for a client, I'm like, they didn't talk to you about this. This wasn't like in their executive summary about some weird fee that I found or some way that they're charging it that's not normal. I'm like, that's bad form on their side.

That's—

we're kind of partnering a little bit here. I'm giving you money, you're doing work, and that's like bad form on your side. I think another one I've seen is this is more in real estate funds. It could be in a, you know, private equity fund too, but they'll do like an acquisition fee or development fee that if they— when they acquire an asset, they're going to get 1% or 5% or they're getting some fee. And they may also be like, and also we are a real estate broker or agent, so we're going to take the commission on the buyer's side. Oh, we're going to have— we have our property management fee that's going to manage the property and we charge the— we assess property management fees. Those things can be okay if you know about it and it's disclosed and you understand like the why. Okay, they need to hire a broker to do this. Are they the right person to do that? Are you aligned on property management? I can see reasons why that could be the case, but I still like to have that disclosure of how are they making money.

Yes, the best question: walk me through every single way you guys make money.

Yeah, that's a good way to say it. That's like, that's like the email. That's the—

just cut through everything. It's like, and I need to see all of them, and I'm going to compare your docs with Claude or something of, is this line up exactly what you said, Matt? Spot on.

Yeah. And I think too, another way I kind of have told a lot of investor clients is, is I want to be making money with you and I want you— like, if I'm an investor, that's what I want to do. I want to be making money with you. I don't want you to be making money off of me. And if there's someone who's in that fee structure, like front-loading the asset under management fee, or basically if they can still make a lot of money off this fund, not on the carry, just through fees. So if this thing just goes flat for 10 or 20 years or it goes down a little bit or even crashes and they still make money, that's not good. I want them to make some money to stay in business, but they really— you want them to be hyper-motivated to make money with you, which is on a carry.

100%. Yeah. Are we aligned? Right. Are our incentives aligned? To branch on to this as well. So again, we got out of the bar. Do they do, you know, audits? Do they do admin? What's their alignment, their incentives, all the stuff we just talked about. Another consideration, which is out— these guys, these guys or gals could be great managers, sharp, all those things check off and still lose or still have poor performance because of just global macro events. I love the quote, macro trumps micro. So what we just talked about was those are the micro details, but macro trumps micro. Meaning if, you know, real estate in the southeastern portion of the United States just for some reason has a terrible decade, even the best managers are going to have probably a subpar decade. And vice versa, even bad managers can perform in a good market. And so a part of being a good allocator is understanding the global macro scene of what's going on in the world. And in the, you know, okay, I'm a big believer that robotics is a huge wave that is hitting right now. Great. I want to now invest into robotic companies that are in this asset class that'll, that'll ride this wave of robotics.

Okay.

I'm going to go find some managers that then are going to attack that wave is one example. And so when you think about a macro wave and again, this, this is where this is why institutional allocators get paid big bucks is they go read all the tea leaves and what the waves is and what's going on in private credit or venture capital or whatever. To see this. I'll give you one example. So there's a great study that's now been duplicated by multiple firms, which is the vintage year of venture capital funds greatly determines the performance of that fund. And what I mean by that is this. So they went back, I think back to the early 1990s, and they looked at every year venture capital funds that launched in that year. So every venture capital fund that launched in 1995, then 1996, and then all the way up through 2012, '13, '14, '15, all the way. I think their most recent data was like 2021, 2022, because you have to see how long a fund is. And there is a distinct correlation between the year you start your venture capital firm and the returns of that firm. For example, venture capital firms that launched in 2001 at the peak of the dot-com bubble in 2000 greatly underperformed venture capital firms that launched in 2003 or '04 because they bought at the bottom of the curve. Evaluations were much lower. Same thing with 2021 and 2022 venture capital firms. That was a peak year for venture capital valuations. The top decile of those funds are still at breakeven right now, what, 5 years later? And so as an investor, these were great managers. These are really sharp individuals. They just— we just invested at the wrong time, 2021. But investing in 2023 or '24 probably would have been the right time, or 2019 or 2017. And so, something as an investor, I'm getting to is the macro trumps micro, seeing the global macro sense. Is it a good time to start into venture capital or crypto or real estate is an important note to see, and that takes just a lot of study and time and thought process, but something to consider.

Yeah.

I love that.

That's a great tip because you've got the person managing the fund and I think you got what is their asset class, but then also like the strategy that they might have within the asset class. I know a lot of real estate guys, very successful people, have made a lot of money in multifamily, actually aren't guys that lost money because a lot of multifamily funds have struggled the last few years, but they just pivoted because they knew the deals were overpriced. They pivoted over to industrial. Some of them are moving to office now because it's significantly discount and have a thesis there. That they're buying way below replacement costs and they think there's a, there's a premiere. Also, there was all that activity in the multifamily and a lot of competition driving up price. And so, so a lot of times I think you have to have a little bit of conviction for what asset class you're investing into, whether it is in real estate and the various subcategories you have there, plus the different markets you can have. Even another one that we've seen quite a bit that's been getting more and more popular has been oil and gas. And that's when I knew a lot of the people that were doing oil and gas They at first were like, man, drill baby drill is killing us because it was creating oversupply. And they, they make money on a certain price of barrel. Now there's war and they're like, and we've got, you know, all the issues in Iran and oil's up and they're like, all right, we're crushing it now. But those are those macro trends that you take a position on and there's a manager that has to execute on it. I get that. But I do think that's good too, is it, is you're thinking about investing in a private fund. Like, where do you think is an opportune time to invest now? Right. Buy low, sell high. Where is good timing here? The vintage on venture capital is a great example.

Yeah. Oil and gas was interesting. We actually had a deal in our portfolio last week. We bought the dip. We thought like oil was at $55 or $60 a barrel. And he's like, yeah, he's sure. He's like, I'm a great manager. He's done two of these funds. We're joining his second and third fund. He's like, if oil jumps to $80 a barrel, we're going to be rich over there. And we were like, well, we kind of, we kind of took a strategic bet. Like, yeah. And then now right now it's at what, $100 or $190? It hit like $119, then went down to $90. Anyways, he's well in the money right now. Done well. Things that are— so sorry, as of filming today, what is it, March 31st today, 2026. Things that I am seeing, at least venture, it seems to be pretty priced high right now. I think good. We did a lot of venture deals the last 2 years because venture valuations were very low. I— we are seeing valuations very hot, getting high now. Can they go higher? For sure. But we're seeing 20, 30, 40x multiples, pretty darn high. The P/E ratio on the stock market, pretty darn high right now. So those are things that I would— I at least as a macro sense wouldn't get into. Real estate, we have a new Fed chair starting hopefully in May. Seemingly we're going to have major rate cuts. I mean, that's the whole Trump administration's push. Scott Bessant, they spent 7 months selecting a new Fed chair. I would think they're going to have significant rate cuts. Now, the market's not pricing that in. I am pricing that in, but I think we're going to see significant rate cuts, which greatly benefits real estate. There's a huge bid-ask spread right now in real estate, which means maybe there's more to fall in real estate. But I think rate cuts could turbocharge our economy coming this summer. But that's a bet you would make. The private credit right now, major cracks in private credit. There's withdrawals being limited from the largest firms on earth right now. Blackstone, excuse me, BlackRock and a number of major— Apollo. Yep. Limited withdrawals, meaning if you're an investor in private credit fund, they are limiting your withdrawals to pull money out or they're selling it for $0.50 on the dollar. Usually a decent time to enter a market when everything is cracking or you can buy secondaries of the scraps. So, that's the things I would look for. Again, I don't know though. Who knows, man? Who knows the future right now? We have AI and blockchain and all these different things coming out. I mean, we are entering a new world of technology, which is very deflationary. So, that could be interesting. Crypto right now has been down, what, 60% in the last 6 months?

Yeah.

Crypto, I mean, could go lower for sure, but man, there are some compelling cases for crypto right now and it's— you're buying at a historically very good price. That's the kind of stuff I'd look at when entering a new market or alternative asset.

Yeah, I think that's really good, really good advice. And, you know, just on crypto, kind of working backwards is, you know, people like crypto is on sale in many ways right now. A lot of people were like, I wish I could have gotten in, you know, Bitcoin's $100K plus, you know, per BTC. I wish I could have gotten in. And then when it drops, those people like are like, they're like, oh, what's going on with crypto? I mean, weren't you the one that wanted to get in on this? But it was below $100K.

Yeah.

Now's your time, you know, for example. And this is again not advice here, this is like just like trying to get some investment perspective and have conviction of what asset class that you believe in. And, and I think it's hard though, because as you're looking at what to invest in, this could be in a private fund or not. I just think like, you know, that the advice from— I think it's Warren Buffett— was, you know, is, is be greedy when others are fearful. It's kind of tough. You know, and, but I think it's proven to work out over time. So if you think about that investing and in private funds is where are some of these managers going where there's real value right now and where you can find good opportunities and deals. Uh, you don't want to go where everybody's already excited and it could be overvalued, and private credit could be that example. Venture might have got a little too much money. Private equity in general, leveraged buyout type businesses, they're starting they're feeling pressure from interest rates too, just like the real estate market. So it's tricky. I think that's, that's what being a good investor is, is, is finding that fund that hits that asset category you believe in. And then also the being able to diligence that manager that can actually execute on that.

And I'll add one more thing, Matt. It's incredibly hard to predict the future. And so there's always a bull case and there's always a bear case for every— like, right, literally in this moment, there's bull cases and bear cases for all of those asset classes we just brought or brought up. If you go back to great advice from great investors, they will tell you be greedy when others are fearful, right? With these drops. But also you can dollar cost average into these types of asset classes. So, okay, I like venture capital. I want to be in venture capital. Great. I'm going to do— and maybe I'm going to do an allocation this year and I'm going to plan to do one next year and the year after that and the year after that. So I'm going to cover 4 vintages. Knowing I don't really know which vintage will be the best, but I'm going to do a spread bet. I'm going to dollar-cost average into venture capital. I'm going to dollar-cost average into private equity or credit. And because I want to have exposure to this asset class. Now, certain times you can see big drops and big swings, but most of the time, it's pretty dynamic and there's bull and bear cases for everything. Take real estate, for example, is a great moment right now in real estate is there's a great a good bull case and a great bear case.

Yeah.

And so, okay, I'm gonna dollar cost average into real estate, or real estate funds for that matter, and that's how I'm going to approach this, this asset class.

Yeah, awesome. Final question I had, and I really appreciate your time sharing all your wisdom and thoughts, Bridger, is, um, what about the new manager? You know, we see those quite a bit, and I've seen them. I've invested in funds that are, that are new. Um, it's their first even fund. Um, because a lot of people I know are like, well, unless you have a track record, or, you know, I'm just not going to invest. Um, this is your first fund, you know, I want to roll the dice on that because I know you're working with a lot of people that might have their first fund. Um, how do you approach that and those people raising capital as their first fund, or even like thinking about that investor and their concerns coming into a brand new fund?

Yeah, that's where we specialize. Most of— again, we did— we've done 14 deals. Most of those were first-time fund managers. So again, uh, we, we go a lot more into the manager, the person. So where are they aligned? Is this— are they going to be around in 20 years? Is this their full-out business? Now, most of them also have track record. They just weren't in a fund. They had done previous deals. They've worked on multiple deals before, and now they're formalizing into a first-time fund. So we can underwrite those previous deals. Um, so you're underwriting previous deals, previous team, the market they're entering. But what's cool about early managers, they have statistically a unique advantage against larger funds. So, uh, there was a great study that came out, was funds under $1 billion and funds over $1 billion. Funds under $1 billion total of assets under management greatly outperformed funds over $1 billion. And it makes total sense because smaller funds can operate in smaller niches that are less efficient. And because they're less efficient, they can drive more alpha in those less efficient markets. Once you get over $1 billion of— you're trying to deploy that much money, you have to go to more efficient markets. The most efficient would be like the stock market, the most efficient market. And it's much harder to derive alpha from them. And so you'll see actually many venture capital funds where they actually, they limit their fund sizes sometimes to $75 million or $50 million or $150 million on purpose because they can drive way more alpha from that fund size. And, and then over time they grow and maybe get to $1 or $2 or $3 billion, but the return profile goes down. So there's actually a lot to be said about early managers. Now, again, do they do annual audits? Do they have a fund administrator? Are they a great team? Are their incentives aligned? All the stuff we talked about earlier need to still line up. But there's actually a lot of alpha to be had with emerging or young fund managers or new funds 1, 2, and 3, because those are the funds that tend to pop off more than others.

Yeah, I, I saw that report too, and I like how you explain that about the efficiencies of the market. And, and because that's where if you're a fund trying to make money, you want something inefficient. You want an area of value that you can add that's going to increase the assets that you bought. I know a lot of private equity firms that target that. There's been so much interest in the quote-unquote lower middle market because they know they can't go buy companies $100 million plus in value. They know they're going to compete with blue chip names. The companies are a little more institutionalized. And if you think about them going and buying smaller businesses, they know they can add more value to those. They can do buy and build strategies. There's so many things that they can do, and that they've seen a ton of success in that lower middle market and private equity. And I see the same thing with real estate. I know a lot of like commercial real estate investors that are like, I invest over $2 million and below $10 million. That little bracket right there is the mom-and-pop can't buy the $2 million-plus deal and the institutions won't even look at the deal below $10 million. But right in that window is like a sweet spot for me to really— I've got less competition and I can find more value. So, And that's where apparently these emerging funds are winning. So, well, how do people learn more about Ubridger? I know you've got events, you've got a pretty active social profile. How do people reach out to you?

Or— I'll just do— there's two free ways that people can just learn about funds. We want to educate and help more people understand this game of investment funds. And so one of them, we actually built essentially a full masterclass on private investment funds and it's completely free. So we filmed it just like MasterClass, the company did. We branded it AltStreet, A-L-T and then S-T. So altstreet.com. It has 8 full MasterClass courses on private funds with 8 different investment fund managers. You're going to hear how they think. One of them is a former NASA engineer. He now runs a $2 billion quant fund to give you an example. And he does an 8-part video series on this. Anyways, altstreet.com, completely free. We want to help more people understand funds, democratize Wall Street, etc. And then the second one is my YouTube, again, completely free. Bridger Pennington is my name. So look that up on, on, on YouTube. Bridger Pennington Fund Launch. I've got hundreds of videos that just teach investment funds. I, I really care deeply about people understanding what funds are, not being scammed by funds. They understand the terms, how it works, because funds are so beautiful. They're amazing. And I actually help people launch funds as well. So we teach everything for free. If you want help implementing it, that's where you pay our company. That's how we make money. We help implement this and I help people launch funds. But a bunch of free stuff, altstreet.com and then YouTube, Bridger Pennington.

Awesome. Well, thanks, Bridger, so much for being on. Really appreciate all your insights. Thanks, everyone, for being on the Directed IRA podcast and tuning in today. We'll see you next time. Until then, stay calm, self-direct on.