Well now I have 80% of my equity left to divvy out to other general partners in exchange for capital. So I will be the trader and as the trader I want to retain 20% equity. However, with this I would not go with more than 10 people MAX.
This makes the money internal and in doing so allows you to invest without all of the extra legal fees and documents needed for outside investors. What we are doing instead is going to friends, family, or others and allowing them to be general partners in our fund for a percentage of equity.
They are typically just investors which comes with all sorts of extra fees and legal documents. When you raise money from investors they don’t become “partners” in your General Partnership, That is a great point and that is where the difference comes into play. “Bridger I thought you said I didn’t need a lot of money? I don’t have $50k to start my LLC and invest.” The difference, is that instead of raising money from external investors, you just invest money from inside the General Partnership. Just like a hedge fund, we will take money from a General Partnership (Manager) and invest it into a Limited Partnership (Fund). With an incubator fund you can build your track record with other people’s money and you don’t even have to be licensed either… You might think that’s a lot but compared to larger funds that cost $30K+… this is a steal. One of the best things about starting these funds is the low legal startup costs, Now this is a strategy that is lucrative. There are ways to get started with little money in the Fund business and today I want to talk about one of my favorites… Many of us don’t have the capital to be able to start large funds when we are first starting out. One of the biggest hurdles of starting a Fund? That’s why Incubator Funds are a great way to turn that spark into a raging fire of success! A lot of us don’t have millions of dollars to invest when we are starting out.
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