How to Improve Your Private Equity Fund

Like think about it like I'm doing software too Ray. So my brain's all in that to now focusing on, on the deal. And I'm just going to talk my way out myself out of every way to invest where if I just knew that I could just go put 5, 10, 20, whatever the amount was in the thing, something and Dan was going to get it and go do the investment. Is that possible? Is that even legal? But Dan, you're up brother. Anything we can help you with?

Yep. So I've been scaling my Elevator syndicate, which is my group of investors. I have 648 strategic investors in my group. We're able to fund a company in a seven day period. Right now we're doing about one deal per month. My ultimate goal is to do one per week and get like 3,000 to 5,000 members into that group.

The one main struggle. So the whole point of it is we say, hey, Joel and myself are investing in this company. We're putting in six figures each. There's $3 million that we're raising, let's call it 2 million bucks left. If you want to invest, respond with how much? So Vince would say 50K, Billy says 50K, Ray says nothing. So you don't have to say no, you just say nothing. So it makes it what I call a soft touch. So we text out all 650 people. If they want in, they say how much they want, if they don't, they say nothing. If you say nothing, you won't get any other messages. So it's nice and easy. So the issue is there are some people that commit and then it takes like we're chasing them four times to wire and they're like, some of them are high profile friends, some of them are strangers. But there's this awkward situation where we actually don't need their money. And so like when they commit, let's say Billy commits and then he doesn't wire for four days. Technically Ray or Vince could wire and then Billy's out. But then that caused a different awkward position. It's like it's their fault that they didn't wire in time. And so we're trying to make the framing now like today's. We overfunded a deal yesterday and so today we send the message out like look, it's first come, first serve with your wires. Just click the link, you answer four simple things and send the wire. If we get too much of wires, we're going to wire it back to you. If you don't wire in time, you're not in. I'm trying to figure out a way to not alienate my. Billy's right, not alienate my friends as this thing scales, where I want them to be able to be in. But it's like a weird like gift and curse situation. That I want this to be super seamless, that I don't go back and forth with Billy and I don't have to text Ray and I don't have to call Vince per deal. But I also like dealing with the human nature of your rich. Your rich friends that get busy or.

Just, you know what you should. Yeah, I got something to just sprinkle on there real quick. The first thing that I thought about when you were saying that and also to getting the text and deals and I missed on deals and shit too. Like, you know what I mean? There's stuff going on, dude. What would. And especially because you have the relationship and like the trust with all of these 648 people is save the card on file. Like, think about Amazon right when we go there, we're like, oh yeah, I do want that click. It's done. And also too for busy fucks like us, like you and I, we have a great conversation. You'd be like, man, I'm like, hell yeah. If I was a one click, I'd be in if I got it. Taylor, send the wire. Distracted. Wait, what was it? You know how we be like there? So I think as a part of the onboarding of those 648, get their fucking cards on file. So then when they reply back, they. They put an amount. They're automatically billed as done. No bullshit card. It's a requirement to be in the investor group. That's kind of like the sign up is your card has to be on file, et cetera or whatever it is. Right. I guess the amounts are larger sometimes. So there's. Yeah, you know, ach, whatever it is, that's permission. Whether it's just fucking no talking, just your number, that's it. The rest is handled. Side note, so.

So yeah. Ray, did you have something on that?

Yeah.

Two.

Two things.

One, I remember so before network marketing, I was a real estate investor and.

We were gobbling up contracts on houses and just flipping contracts like crazy. And.

So I did have. I mean, you would have to check the legality, but I did have people that had. They saw what kind of deals I got and they're like, hey, I don't want to miss out. So they would just like send me money and like, hey, hold on to this money. And, and so you know, that's one option but I remember when I was on the speaking tour there was, and I forget his name but there was a guy that did apartment complexes and he had an A and a B group and the A group was people who had invested a certain amount with him and he sent them the offer first with a very clear deadline. And just like, hey, boom.

You'Re seeing this before the B group, which is the big group. And and so you know, I think that, that you know, that might help too. Oh, I'm in the A group. Oh man, I'm, I'm able to see this before the other guys create a little bit more urgency maybe.

That's cool.

And I like that a lot. The Mastermind event we also present to the group in advance. So whether it's the Avengers group or the 100mil group, we present for half hour there, I'd hit them before the.

Event, I'd hit the A group before the event and say, hey, we're about to present this at the event. You're gonna get first crack at it. That's just, just my opinion. And when I, I don't know if you know who Russ Whitney is, but I remember, you know, like he had probably the most gangster escalation path and he would tell his guy, he would tell his investors, hey, whoever is buying pre construction homes, you also get first crack at the deals. And so you can have, you could preempt that and say those who've invested X, you're in that, that A group. So that's my two cents.

Yep.

So I have a question.

Sorry, real quick. I want to ask one question, Dan, you know, again, just knowing the group and knowing there's fuck faces like me where it's like, truth is if you tell me you got a deal, as long as it's something with integrity and something I believe in, I don't give a fuck what the business is. I'm like, what do you think the return is going to be Cool, here's the money. So I do, going with what Ray was saying, which is super smart, is can you just say, hey, how much do you want to invest this year? Just in the beginning. Welcome to the investors club. What do you want to start off? It's your first year, 100k.

Cool.

Wire it over. At some point during the year it'll be deployed, you know what I mean? And again I think there's regulations in regards to how much you can hold etc with something like that. But like I'm just like, because at that point it's like for me, like I would do better with something like that. Again, just speaking kind of from the consumer in that group of like here, take the fucking money. Like I don't know when we'll use it, but I think a lot of people would do that because one thing that's unique about your relationship is you have so much brand trust with those 648 people. It's not just a group, you know, I mean like people really fuck with you. And if you're gonna say something, I don't think you really need to sell them. I don't even think if you didn't even tell them the name of the company, you should try it on your next one. Hey guys, I'm not gonna tell you anything, but I really think this looks great.

I guarantee you raises the same amount, you know what I mean?

So. And Billy, real quick, that's why I was gonna ask, similar to what you were saying, like I'm the type of person you could just say, Vince, just wire me five, ten grand a month. And then I don't even. That's what like the different investor club. If there was a continuity plan and then you just, at the end I just go okay, well what did we get versus you calling me on the deal? Because now I got to take my brain from like think about it like I'm doing software too, Ray. So my brain's all in that to now focusing on, on the deal. And I'm just going to talk my way out myself out of every way to invest where if I just knew that I could just go put 5, 10, 20, whatever the amount was in the thing, something and Dan was going to get it and go do the investment. Is that possible? Is that even legal?

So I created that, it's called Elevator rolling fund. I partnered with Angellist and I made it easy the way that you just said, Vince, people can pay quarterly so they can do as low as 10,000 a quarter. Most people are doing 25k to 100k a quarter, but 10,000 a quarter is the minimum and it's all automated. So I do all the investing out of that rolling fund into the same deals as the syndicate group. But you don't have to. I don't have to call Vince or Billy. It's just automated. They can pre wire for the whole year or I can ach them not I can, it happens automatically. You get ach once a quarter with whatever amount you commit. So if you commit 10k a quarter, 25k a quarter, 100k a quarter. Doesn't matter what the amount is. It is ach from you. And you get a report about what happened during those three months of what I invested in on your behalf.

Identity versus transaction. Right. Like when it's a, hey, here's the deal. Would you like to invest? It's a transaction. And now I have to make a decision if I want to transact versus the identity of yes, I'm an investor. I'm 100 million investor. Like right now. I've been paying whole life insurance five grand a month for like six years. I don't even think about it. Like, I don't blah, blah, blah. But if I was wearing the identity of like, I am an investor, like I love the rolling fund, was talking to my buddy Mike Cooch about those, like, I like that idea. Just let me fucking forget. But I do like monthly better than quarterly. Cause even quarter, it feels like I need to reevaluate, make a decision. Cause we're trained, Q1, Q2, Q3, Q4. But that monthly of like all those guys, I mean even just thinking about like payment plans, you know, a hundred grand, like a 5K, it doesn't feel so risky. It just feels like I'm being a disciplined investor. You know what I mean?

Nice.

And if you wouldn't invest, let's say they did a hundred grand in one year and you don't buy anything. It just rolls over.

Right.

And they just can use it on something different. That's the cool part about something like that.

It rolls quarter to quarter. Yes. Each quarter is a new fund.

Nice. And what do you just like, how much are you investing in businesses? Is it specific amount or each company the same? Different. Are there specific types of companies that you invest in?

Yeah. So We've been raising 2 million to 6 million per deal in companies that are doing 2 to 20 million revenue on average. We've deployed 27 million the last five months. And we did 2 million with Gary Vee into a healthy oatmeal company. 3 million into Icon Meals. 4 million into my sports card business. 5.3 million into a chicken company, $6 million into cauliflower pizza. Yesterday we raised $3 million for Skinny Pasta. And we raised the entire amount every time in less than an hour. Then it just takes a week to get people to sign and wire.

Yeah, 2 to 6 million. And.

We'Re only focusing on companies that are doing 2 to 20 million in revenue to prevent it reduces our risk a lot instead of going after startup companies. And we're Negotiating a good discount devaluation that Joel's negotiating. Because we're like, hey, you're going to get 41 strategic investors, but you're going to get one wire from Dan. So only your cap table, it's just elevator, syndicate, that's it. But you've got the power of these 41 guys that just invested into you that all want to see you succeed. So if you need help with email or social or accountants or lawyers or warehouses or shipping or whatever, you've got 41 smart people that are investing with you without having to deal with the headache of 41 investors. So from a founder's perspective, we got discounts.

Food for thought too, Dan, because again, it's, it's like you've done a super good job of building up like this audience of really successful, influential people. It's been your thing for the last fucking two decades and you kill it at it. But something else I would think about. So me and my buddy Mike Cooch are starting a fun. We're basically like, we use our audience to raise money to buy software businesses in particular, but then just to fucking slang them and I'm like, my biggest thing is if they're in the entrepreneur niche between my fucking audience, they're like, we want to deploy the audience too to get the customers quick. So something as a note for you, it's like you named all of those companies, but is there something else where you can get the volume of a hundred thousand people? So that way when you have those companies, skinny pastas, all a hundred thousand of those people can start eating skinny pasta, you know what I mean? So it's like. Because right now you got all the strategic edge of like any call, we need to make any resources. But if you can get that fucking volume where you can get the users automatically right away too. Something to think about.

I like that.

Yeah, I like that a lot.

What's your, if you don't mind me asking, what's your average return of the investor?

So it depends. These are all I've had exits. So I did 37 investments personally and some of those have exited. Those exits have been anywhere from 6 to 15x. One of them was 29x. But the syndicate group just started last year. So the companies have not, have, have not exited. All of them escaped and well, but they haven't exited yet. So it's. That part is speculative. You know, we don't know, but we know. Let's say a company has a 20 million valuation if we get in at a 12, because we got a discount and they go from 20 to 40. We didn't go up 2x, we're up 4x almost. And so it's interesting, by getting our discounts in these companies early, we're getting big discounts, not little discounts. We're getting like 30 to 60% off. And so that is building in cash value. Day one. So the second you invest, and if it was worth 20 million, we come in at 12, day one, you've got that spread. Your 100k is worth, let's call it 180 because. So.

That'S what we've been really good at is getting people big discounts. They get the same terms that we get. And I invest in every deal. So I put in 100k plus in every deal. Sometimes 500k plus if it's depending on the transaction. My partner Joel's been putting in 500k per deal. He did a million in cauliflower foods. His partner Josh has been putting in 500k per deal. So we're writing a check too. Most people that understand aren't putting any money in. We're putting in the deal yesterday with Skinny Pasta out of the round, me, Josh, Joel and Bobby Castro, we did more than half the round, just the four of us. So people can believe we're not just. We don't care just about the carry. Like our percentage we're going to get later in the future. If it sells, what does it matter? We're throwing in almost $2 million just from four of us.

And what percentage of the companies are you typically picking up on these deals?

So when we did, like, I can't say the exact numbers, but basically we're raising. When we're putting in 3 million, most of these companies were buying in at 10 to a 30 million valuation. So we're getting a pretty good sized chunk of these companies. When we put in 6 million and 5 million into a company that's worth around 20 to 40, you can see we're getting good sized chunks.

Yeah, the discounts help a lot. And the shareholders, even the previous investors in a deal are approving us because they can see, oh, Joel's got 20 million emails and Dan's got the biggest social media agency and this person, that person, the characters that are investing into that company are going to really help it, not just be a check.

That's cool.

Cool.

Awesome. Anything else we can give you feedback on? I really like that idea of figuring out the distribution model along with the acquisition. What you were saying, Billy, I think that that is an added bonus. I think it takes a lot of stress off the investors coming in knowing that the chances of that company getting results or, you know, just that much greater. I hope you enjoyed the show. We're having a lot of fun with the battle mastermind, and we're gonna keep them coming for you. But you got to do me one favor, and let's just hit that, like, button comment and subscribe, and until the next one, see you on the Internet later.