How to Start A Fund in 12 weeks: A Fund Manager's Guide to Launching Your First Fund

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In this episode of Making Billions, Ryan Miller explains why a fund is a scaling vehicle, not a launching vehicle, emphasizing that the $100 million equity floor is the minimum threshold for operational viability. 

For fund managers and high-net-worth investors, understanding the math behind management fees and unavoidable OPEX is the first step in avoiding the common "10-year trap" that kills most emerging managers.

How do you launch a fund without going broke?

Build the $100M Floor: Only launch a blind-pool fund when you have enough equity to cover the $250k+ in annual operating costs.

Use SPVs to Scale: Prove your track record through deal-by-deal vehicles before committing to the complexity of a full fund structure.

Sequence Trust First: Establish your brand through content and consistent returns so that LPs are ready to commit before you pay for formation.

[THE HOST]: Ryan Miller is a fund manager, capital strategist, and former CFO turned angel investor in technology and energy. He is the founder of Fund Raise Capital and Aequor Capital Partners, and has mentored over 1,000 fund managers across private equity, private credit, venture capital, real estate, and alternative assets globally.

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Transcript

Ryan Miller  

I probably shouldn't be telling you this, but I'm going to do it anyways. If you want to start a fund without going broke, doing it, then watch this video. By the end, you'll have the exact step by step path. Most fund managers spend 10 years learning the hard way. It's the structure, the waterfall, the regulatory exemptions and the four mistakes that kill 90% of emerging fund managers stay to the end, and I'll give you the free playbook to take with you. But before we get in, just a quick disclaimer, nothing in this episode is legal, tax or investment advice, every fund launch is different. Always work with qualified securities attorneys, tax advisors and compliance professionals before making any decision. This is education, not recommendations. Let's dive in. 

Ryan Miller   

So before we go anywhere, I need to give you the one reframe that will save you years and millions of dollars. A fund is not a launching vehicle, a fund is a scaling vehicle. So if you try to use it to launch, you lose. If you use it to scale at the right moment, you win. So here's the math that proves it, and I want you to really hear me, because most of the people listening right now are about to make very expensive mistakes without understanding the math. So management fees in the market right now have compressed, the 2% management fee era is fading. Today the market has settled around 1% for emerging managers. And here's a critical nuance most people miss, you only charge fees on equity under management, not total assets under management, you cannot charge fees on borrowed money to a lender. So when you see a $500 million fund announced in the press, understand that if that fund is 50% levered, they're earning fees on only $250 million of equity, not $500 million equity is the number that matters. 

Ryan Miller 

Now let's do the math on what it actually takes to build and run a fund. At $100 million in equity under management, your 1% fee manages to generate about a million dollars a year in managing fee revenue. Your annual operating costs include fund administration at about $50-75k, annual audits and accounting around $30-50k securities attorney retainers at $40-60k tax advisors, between $15-25k insurance at $10-20 fund, accounting software, compliance tech, all of that $15-$30,000 meetings, flying out, talking to investors, that could be $20-$50,000 and office, plus miscellaneous year round $15-40k. So the total unavoidable OPEX, and you're now looking at two to $350,000 let's just call it $250 split it down the middle. So at $100 million equity, your million dollar fee, minus $250,000 OPEX, leaves you with about $750k, so that's not bad. So you can hire two or three people just to get this going. It's not just software, it's actual people doing the work. So you can pay yourself, you can scale, and it works. 

Ryan Miller   

Now let's talk about something else. The $30 million fund, your fee is $300k, your OPEX is still $250 because the auditor, the attorney, the tax bills, they don't shrink just because you're smaller. So you're left with about $50k, think about that $50,000 to pay yourself, pay a team and run a business that's not a business that's a 10 year trap. Because your LPs have committed and you can't just shut it down. You're now locked in desperate making bad decisions because you need to. This is why the fund is a great scaling vehicle and not a great launching vehicle. They're really expensive to operate, and they're infinitely more complex. So that's why we talk to attorneys and make sure that you know what you're getting yourself into. So at the $100 million dollar equity, that is the floor for a fund to function. Now, everybody's situation is different. You might need to be a little bit less, a little bit more, but the point is just make sure that you can actually pay for your operating expenses. So at the $100 million range, think about that. Below that, you don't launch a fund, but you can build toward one and so we're going to talk about exactly how to do that. 

Ryan Miller   

So when you're ready to launch, here's the architecture in the exact order you need to build it. So step one is start with choosing your structure. So here are four of the main structures, and I want you to memorize them. So there's the GPLP Fund, which is like a Delaware Limited Partnership, the institutional gold standard. And what Blackstone, KKR, Apollo and Carlyle use that is, falls into this category, especially when they started with their funds. It's what institutional LPs expect. So the legal costs top at around 75,000 for a proper setup. You use this when you're raising $100 million or more in a blind pool fund. 

Ryan Miller 

Then there's something a little bit more simple, it's just the LLC fund. It's a lighter alternative common for real estate syndications or smaller private credit. Those top out at around $30,000 or less. So the downside is that some institutional LPs won't invest in an LLC structure funds at all, we'll get into this in a minute. Then there's series. LLCs one legal entity with multiple series, each functioning as its own fund. So it's kind of cool. So these are cost efficient if you're running multiple strategies, or a deal by deal vehicle under one umbrella. So this is where Delaware series, LLCs will give you that statutory liability protection between those series, so again, you talk to your lawyer. And then one, this is easy. It happens all the time. So if you're not quite at $100 million, why, as we say, let the fast go fast. So why do that, why create something that's overly complex and expensive if it doesn't have to be. So there's really no benefit at the lower ranges. In my opinion, I've never seen a benefit that justifies the cost at a sub $100 million setup. 

Ryan Miller 

So one of the best ones is SPVs, or Special Purpose Vehicles, one deal and one wrapper. So those top out anywhere between $5-15k per deal, not a fund, the training ground every great fund manager uses before they launch their fund. And think about this, an example is Henry Kravis at KKR, he did SPVs before he even launched KKR. Sam Zell did the same thing, deal by deal, before his first fund. This is a critical step that you do not skip. If you do it, you run the risk of getting yourself into a lot of trouble. And I've coached over 2000 people on launching funds, so I've seen it all. I've seen people with big ambitions, really smart, and they crash and burn. And then small people that start, and they build, and they do it in a systematic way, like I'm teaching you now, and they grow into that fund and believe it or not, when you do it right, you get there a lot faster, at least faster than you thought you could. So the action item here, blind pool fund at $100 million, that's the GPLP below that, do single deals like an SPV or an LLC again, talk to your attorney. They'll help you understand what's the right move. 

Ryan Miller 

And that brings us to step two. So you want to choose your regulatory exemption. Once you understand that structure, size, see your fund. It really is a securities offering, it has to fall under a regulatory exemption. So let's talk about the ones that you can choose. We'll just give you a highlight, and this will help you have that conversation with your attorney. So the common one, the workhorse, is what's called a Regulation D. If you're opening in the United States, a Regulation D is typically 506 B and 506 C. 

Ryan Miller 

So under a 506 B, that's unlimited capital from accredited investors, plus you can get up to 35 sophisticated non-accredited investors. But here's the catch, you are not allowed to solicit the public to come invest. No advertising, no public posts soliciting capital. Every investor must have a pre-existing and substantive relationship with you before they cut the check. So think about that. Who can actually raise money with just people they know, I think, as just rich people. Who can start a business and not advertise, that's insane, but ain't no shame in that game. Not here to make anyone wrong, but we're saying, if that's not you, and you don't have the network to get to that place, then maybe we look at other options. And again, you talk to your attorney about that. So a 506 B is you use that when you're raising from your existing network and you can your existing network can get you to about that $100 million range, if not, then we look at other options. 

Ryan Miller 

One of the most common one, and I, personally, I like these. It's a 506 C, and under a 506 C, you can advertise publicly, LinkedIn, podcasts, conferences, websites, webinars, but the trade off. Every investor must be accredited, and you must take reasonable steps to verify their accreditation, you cannot take their word for it. Verification, it could cost anywhere from $50 to 100 bucks per investor through services like verify investor or through their CPA or attorney. So use this when you're building a public brand or running content driven inbound from investors. And then three more exemptions worth noting just briefly, I wouldn't suggest going into that, but if you think they sound cool, you can talk to your attorney about them. There's Reg A so that allows you to do up to $75 million from retail investors, but SEC qualification costs like $100 grand plus, and it takes six months or more. So not always a good fit, especially if you're just launching a fund right now. Only use that for true retail at scale. It's not practical for most emerging fund managers. Then there's Reg CF, or crowdfunding that allows you, if you're registered under that exemption, that allows you to do up to about $5 million through approved funding portals. So that works for early stage operating companies, not necessarily investment funds. Then there's regulation S, or Reg S, that lets you raise from non US investors without any SEC registration. So again, confirm all that with your attorney. So that one you only use it if you have cultivated real international LP relationships. So here's an action item. 99% of emerging US fund managers choose between a 506 B or a 506 C. Pick a 506 B, if you're raising from your network, pick a 506 C, if you're building a public brand and doing content driven inbound calls to potential investors or LPs. 

Ryan Miller

That brings us to step three is building your legal architecture with your attorney. See your securities attorney drafts three documents, an LPA or Limited Partnership Agreement. That's the contract between you and your limited partners. Fee structure, waterfall, investment restrictions, key person provisions, LP rights. It's about $15-30k on the top end. Then there's PPM or private placement memorandum. The 60-100 page offering document that every investor receives that covers things like strategy, risk, teams, term and any of the required disclosures. That puts you around $20-40k for that document. Then there's other ones that are minor but also important, like sub docs or subscription documents, basically. It's what they sign off to say, I'm in for this amount of money. Here's my signature, let's do this. So sub docs, those are the forms that they sign, and it's usually bundled with a PPM. 

Ryan Miller 

And then you have your Delaware Management Company or LLC, that's around $2-5k plus regulatory filings like the Form D with the SEC State Blue Sky filings, if they apply, potentially any investment advisor registration depending on AUM and state. So that, again, bumps you with another $5-15k. So we're already at the place of total legal setup costs anywhere from $45-$90,000 just to get this going. This is not where you cut corners. Use a dedicated securities attorney with 20 plus fund formations under their belt at minimum. Hopefully there's another zero on the end of that, but that's a place where you really want to go. So I watch managers try to save money by using general business attorneys. Bad idea. Do not cut corners. The PPM had errors. The LPs councils caught them in due diligence, and it blew up. And the result the LP walked as you can imagine, the manager paid twice to redo the documents and last six months. Do not be that manager. 

Ryan Miller  

Now, once you have that in place, now you're set up to consider things like the operational infrastructure. This is where you stand up these systems before you do your first close on your fund. So this is where you get a fund admin or fund administrator. Think of them as like your internal finance department, receivables, capital calls. Some of them even help you with investor verification that we mentioned earlier. They handle all of that distributions, NAV, month end statements, investor statements, tax documents. They do it all. And some of the top tier platforms are Juniper Square, Carta funded, min, all of you, and my personal favorite is SSNC. Some of them run $40-80. If you want top end, you're $100 to $200,000 a year. So it can add up really quick. 

Ryan Miller  

And then banking, you want to find a dedicated fund account at an institution that understands fund structures. So some of the more popular ones are JP Morgan, private bank for institutional grade service, Grasshopper Bank or Mercury for leaner operations. Then there's also insurance, E&O or Errors and Omissions, plus directors and officers. Insurance that's $10-20k a year, that's non-negotiable. Then there's a data room you need to be able to communicate to your investors that we move fast, we're prepared, and you can just send a link to sub docs, bios, whatever that is in your data room, you can have that ready. So building out your data room is just essentially the place that people when they want to do their due diligence, you can send them this link, and it has everything that they could need. And then the questions will follow. So data room providers that you can have set up are answer Ada interlinks or Juniper Squares built in version. Then there's CRMs like mine, which is CRM.fundraisecapital.co where you can implement a lot of those investors. And it comes pre loaded with like 150 160,000 investors, pre loaded. So let's, let's take a breath for a minute. LPs, evaluate your operations as hard as your investment thesis. So sloppy operations kill more raises than a weak thesis. Build these systems before your first close, not during. 

Ryan Miller   

Now let's talk about the equity waterfall. This is where the real money lives. This is how we describe as the money comes in, then we invest, and then when we exit, the money comes out. Here's who gets paid in what order and by how much, that's your equity waterfall. It's really that simple. So the waterfall is the math of how profits flow between you and your LPs. It's that simple. Most emerging managers don't fully understand this after today, you will. There's four tiers. Let's dive in. 

Ryan Miller  

So the Tier one is the return of capital or principal. So before anyone earns $1 a profit, your LPs get 100% of their capital back. It's that simple. Basically, we're saying you invested $10 million, we're going to make sure you get that back first. You get your principal back before anyone else starts participating in it. So those are good terms, those are actually quite common. So you get that money back, dollar for dollar. So that first $10 million goes back to the investor out of those distributions, this is non negotiable. 

Ryan Miller  

Then there's the next tier, which is your PREF or preferred return. That's optional, lot, a lot of people do it as I think it's a good idea for emerging fund managers to include a preferred return, just because that helps to make a good deal for people taking a bet on a reasonably unproven, if not completely unproven manager. So you really want to sweeten the pot. So after LPs recover their initial capital they invested with you, they earn a preferred return. Sometimes we just call it a PREF. That's typically around 8% a year. This is somewhat of a hurdle rate, you can say, so you as a GP, earn nothing until LPs clear that. So the principal plus the PREF, so you can say, look, if all you earned was the 8% or six or 12 or whatever your whatever your PREF is, if all this fund earns is that 8% you keep everything pretty good deal. So you raise the stakes on yourself to say, I'm so confident it's going to earn more than that, because I don't work for free, and nor should you. But we'll set up the terms to reduce your risk, because you're trusting me, and so your risk is well justified. It, or at least that's the message you want to send, and so you you will get that message right with your attorneys. 

Ryan Miller   

Hey, thanks for listening to Making Billions. If you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show. 

Ryan Miller 

That brings us to the third tier, which is sometimes called the GP catch up. So once your limited partners hit their PREF , you receive a larger share of the next distribution until you're caught up. So you get caught up to your carry percentage, so in a 100% catch up, all the next dollars go to you until you've earned 20% of total profits. So in an 80/20 catch up, what that does is, this is what I like to call a circuit breaker. And so often when you introduce a PREF  it kind of manipulates the economics of the deal a little bit in favor of the LPs. So sometimes when you do a post mortem math equation, you'll find out that it might be like 82/18 and so you kind of gave up a couple of points. So really, the simple math that a lot of lawyers do is to say you just take whatever your carry percentage is. In this case, it's 20% and you multiply the PREF  by that. So 8% of 20 is about 1.6%, what most people do in that case is they just round to 2% so you just say it's a 2% catch up, and that helps to ensure that there is as close to parity as you can make it for that 80/20. If you really want to be precise, you do the 1.6 but it's just there as a circuit breaker to make sure that the deal remains fair. And it is what everybody expects it to be, where the LPs get 80%, you get the 20%. So that is the next phase of as cash kind of works its way through the waterfall that just makes you whole. 

Ryan Miller   

And that brings us to the final which is the carried interest split. So after the catch up is paid, the remaining profit split 80/20. 80% to the LPs and 20% to you, or the general partnership, this is where the real money lives. A $100 million fund that returns a 2x generates $100 million in profits. 20% of that is $20 million in carry that sent right to the general partnership, or you and the other owners live. This is why you're doing all of this. Now there are different flavors of waterfalls, and I want to talk about the two main ones, European waterfall and American waterfall. This is a strategic decision, and this one decision shapes every economic conversation you'll ever have with an LP. 

Ryan Miller 

So let's talk about an American waterfall, or a deal by deal basis. So in an American waterfall, carry is calculated on each individual investment. So each profitable exit pays you a carry immediately faster money to the GP, and riskier for the LPs, because if early winners pay you carry and the later losers tank the fund, you may have pocketed carry on that fund that ultimately lost money. Now that's good risk management for you as general partners, especially if you are a GP, but be prepared is that some sophisticated limited partners may ask for clawback provisions, just in case that happens. So if you run an American waterfall and you're pitching institutional investors, I would set the probability quite high that they're going to ask for clawbacks and clawbacks can be very painful if you're not delivering on that. But that is their own circuit breaker to say, I don't think it's fair that you walk away with a ton of money, and I lose a ton of money. So in that scenario, I want to clawback some of your fees so that I get made whole for the risk that I took betting on you. So you can see this is a bit of a negotiation. 

Ryan Miller  

The other one that I personally like is a European waterfall or a whole fund, I feel like this is quite balanced and quite fair. So carry is calculated on the entire fund, you earn nothing until LPs receive their entire capital back, plus the PREF, and those returns go on all investments, the entire portfolio of the fund, not just deal by deal. So it's slower money to the GP, but not slow. Stronger LP alignment and the institutional standard is European waterfalls, especially for private equity. So here's the decision framework raising from institutional LPs. So that's things like pension funds, endowments, funds of funds, whatever that might be, they use European, it's what they expect. So trying to negotiate a GP friendly American waterfall with an institutional allocator can cost you credibility and often kills the conversation right there before it even gets to anything exciting. See raising from high net worth individuals in family offices, especially in real estate or deal by deal strategies American is more common and often acceptable, but they do include meaningful clawbacks, that's where you can land. And if I was in those, I would try to avoid it, just because that just shifts risk back onto me. And that's exactly the point that the LPs want to say, if you get paid for under performance, I'm not okay with that. I want to clawback provision that in that scenario, I still get something that is fair. Because I don't think that's fair that you get paid to lose my money, I don't think that is either. But do each their own work that out with your attorneys. So here's the action item if you want, and the sale. Is good and you talk to your attorney, you can default to European for your first institutional fund. It signals alignment and sophistication. You can add a clawback and an annual true up, regardless of the structure, if you want, but do that very carefully, and just make sure you understand the clawback provisions when you talk to your lawyer about a, but regardless of what you choose, just know transparency wins LP relationships. So make sure that you're very clear that you're genuinely trying to make a fair deal for everyone involved. That earns you trust, that earns you respect, and all those are needed to get the money. 

Ryan Miller   

That brings us to some of the mistakes that people make. So this is all good. It's very mechanical, and you can do that. Let's talk about some of the hidden traps that exist. There's really four mistakes I've watched kill talented managers, and I'm here to help you not be one more. Losing strategy number one is buying lists of investors. Someone sells you a $30,000 database of 2000 family offices. You email all of them, you get three meetings. You get zero commitments. This happens every week somewhere in this industry, and it can happen to you if you try it. Here's why it doesn't work. The family offices on that list get 50 cold emails a week from unknown managers, your email is just noise to them. It gets deleted in two seconds. Or worse, you've burned your reputation with all 2000 of them. See cold outreach to institutional LPs when you're an emerging manager, is self sabotage dressed up as effort. So the action item here is spend that $30k on travel and potentially hiring people to help you out in your fund and make sure you do it with people who have those relationships. See warm introductions, convert at 40-60% cold emails one to 3% so pretty clear that this is not an effective use of capital. Warm introductions are 20 times more efficient, always think about that, that is phenomenal numbers. 

Ryan Miller 

That brings us to losing strategy number two, networking events as fanboy theater. I've watched this hundreds of times. An emerging manager goes to SALT,  Iconnection, Super Return or Milken, spends three days admiring jets, gushing over yachts, taking photos in front of Ferraris in the valet line, posting selfies with billionaires, just cosplaying as someone who runs a fund, rather than someone who actually does it. It's the difference between a fund tourist and a fund Titan. They come home with a stack of business cards and yet zero relationships. You didn't go there to be seen, you went there to raise capital. Those are two very, completely different objectives, and most people I watch at these events are optimizing for the wrong one. See being seen at an event doesn't help you to raise capital,  being prepared does. And being at the right events are rare. Very few work, and the reason why is most people need money. So you think you're the only one who's going to go to these events to raise capital, when in reality, everybody's there to Fund Raise Capital, my community of fundraisers and fund managers, but you really want to make sure that you're not wasting time and capital just cosplaying and fanboying for the Instagram picture. You really want to make sure that whatever room you're in is a room of people who will allocate capital and typically going to events, is not it. Plus getting that Instagram photo as a fanboy in front of someone else's yacht or Ferrari or jet or whatever, that instantly destroys your credibility. It just makes you look like a fanboy. It makes you it makes it look like you're just cosplaying as a fund manager rather than the real ones, and institutional investors see right through it. So be very careful on going to these events and how you conduct yourself. Number one, most people need money, very few people go to them who have it. And number two, if you're just flashing the Instagram and you're trying to be seen and trying to look cool on LinkedIn, very bad strategy, and that can actually harm you in the long run, so be very careful on the events that you go to. So here's the action item, if you want to go to conferences before every conference, identify 15 specific LPs you want to meet. And if you can't figure out who that is, maybe that's not the right event for you to be at. Research them deeply, their allocation, history, portfolio, public commentary, and you can request meetings through the conference platforms in advance. So come with a point of view, not a pitch, two real 30 minute meetings, beats a 100 handshakes every time. 

Ryan Miller 

That brings us to losing strategy number three, launching a fund too soon. To me this is one of the most dangerous ones. You think launching a fund will solve your capital raising problem? Here's the hard truth, no one's going to say to your face, launching a fund when you're not ready doesn't solve your problem, it multiplies them. Now, instead of trying to raise $10 million for a syndication, you need $100 million for a fund. Now you have annual audit requirements, fund administration obligations, compliance overhead and a 10 year lockup. You've increased every cost profile and every friction point in your business, and you didn't need to do it. And if you can't raise the fund, you've just told the entire market you can't raise, that scar can take years to heal, if ever, sometimes it'll never heal. Funds don't create fundraising success, fundraising success creates funds. You earn the right to launch a fund through a track record, cultivated LPs and trust deposited into the market over time. This is exactly why I built the Fund Raise Capital Community, because I watched too many talented investors launch funds prematurely and completely bomb and lose everything. Fund Raise Capital gives you the runway, the community and the step by step path to launch at the right moment, not at the rush moment, and we'll get into that in a minute. 

Ryan Miller 

That brings us to the losing strategy number four that I've been able to observe, which is hiring broker dealers before you've earned the trust. See, the universal law of capital raising is trust always comes before the transaction, always. It's the law that kills most emerging fund managers. If you've ever seen my LinkedIn inbox, it's typically here's my pitch deck. Please take 30 minutes to review it, then book yourself in my calendar, here's the link for your convenience. I don't think so there's no trust. I don't know who this person is, and I'm not the only one that feels it. Trust me. I've been in these conversations, everybody feels that way. Here's how that mistake looks. You decide you can't raise on your own. You hire a broker dealer or a placement agent, they charge you a retainer of $10-$30,000 a month, plus two to 4% of capital raise. You think, great, they have the relationships. They'll bring the LPs, and then for the next 12 months, they take your retainer, make a few calls, send a few decks, and raise approximately nothing. Why, because broker dealers do not manufacture trust. That's why they're good. They're good at what they do, but they can't engineer your trust for you. They're good at pushing the transaction. But if you don't have the trust in place, why would anyone give money? Would you give money to someone you don't know or you don't trust? Can you see the point? This makes it very, very difficult. So if the market doesn't already trust you, if LPs haven't already heard your name, or haven't seen your track record, or haven't followed your thinking. Broker dealer is not going to fix that, they definitely won't do it overnight. They can introduce you to LPs, but LPs can still say no to introductions from anyone for emerging managers without established trust in the market, LPs say no almost every time. But what's worse, if a broker dealer is willing to take you on before you have the trust. Ask why they're willing to take fees with no path to success? The answer is, usually that your fees are the deal, not the capital raise. So here's the action item, build trust first through content syndications. Go on podcasts. There's lots of ways to get your thoughts out there and help build that personal brand and a brand is what people trust and count on. So start doing that early on. It doesn't even have to be great, just it just has to exist and you can get started. Once that's in place, then you can amplify that with a broker dealer when you have the trust to amplify, not before sequence matters. 

Ryan Miller 

Now the actual roadmap, this is the question most emerging managers never ask because it feels too slow. I get it, but slow is what works three to five years from where you stand today, stage one the deal operator, that's months one through 12. You're not running a fund. You're running deals. SPV is at $5-15k and you raise about $500,000-$3 million per SPV from your existing network. Those are friends, family, fools and followers, as I like to say, quadruple F. Your goal is to prove that you can source, evaluate, execute, manage, and exit a deal profitably, three to five SPVs in 12-18 months, documented returns, skin in the game. Most people skip the stage because it just feels unglamorous. Every great fund manager has stage one again. Let's go back to Henry Kravis, he did SPVs before KKR. Same with Sam Zell, he did deal by deal before his first fund. You'd never skip this. 

Ryan Miller 

That brings you to stage two, the syndication builder. Those are months 12 through 30. You now have a track record from your SPVs. You scale up LLC syndications, $5-$20 million per deal raising from high net worth individuals and smaller family offices that have watched you operate. You build three things in parallel at this phase, track record, LP based, depth and operational muscle memory, quarterly reporting, investor communications. You want to have all of those in place, because deal execution needs to happen at pace. So by the end of stage two, $30-$75 million of cumulative capital is raised with 30-50 LPs who trust you, and you've produced audited performance. Once that's in place, you can move to stage three, the programmatic syndicator. Those are months 30 to 48. This is the transition stage. Your syndications are now predictable, four to six deals per year, $10-$25 million each series, LLCs or standardized templates that we talked about earlier that helps you to move fast and move cheap. 60 to 100 LPs now are starting to take a look, and they're starting to jump in. 

Ryan Miller 

This is where you start having conversations with institutional LPs about your future fund, not to raise capital yet, but to plant seeds. You let family offices, funded funds and smaller institutions know you're building toward a blind pool fund in 18 to 24 months from this point. So what you do is you collect soft commitments. By the end of stage three, you'll it will look something like this, $100 million plus cumulative raised you. Three potential anchor LPs who are warm for your future fund and public brand in your niche starts to exist. Once that's in place, then you get to stage four, the actual launch of your fund now. 

Ryan Miller 

Now this is where you launch, and when you do, you're not launching into a cold market. You're launching with committed anchor LPs, proven track record, verifiable performance, and existing investor base ready to roll in, and a market that knows your name that is important. So now we've got the trust which leads you to your transaction. This is where the target rate is going to be anywhere from $100-200 million for fund one. So in that case, you roll existing syndication investors in as founding LPs with preferred terms. So you give them a little bit, give them a little bit of extra benefit from rolling from your syndications into your actual fund, whether that's in a PREF or a different PREF for them versus everyone else. You work that out with your attorney, but find out, how do I roll them into an actual fund? And so now you're at a place where you can raise a lot more and you can afford it. So fund one raises in 6-12 months, instead of 24 because you've done the groundwork before. Nothing worse than spending $200,000 to launch a fund that you cannot fill with capital. And like I always say, without capital, it's just a bunch of smart people having coffee over zoom. It's like, what are we doing here? So this is the path three to five years. I know it feels long, because it is, but the managers who walk it win, the managers who skip it lose without question. 

Ryan Miller  

Now here's your 72 hour action plan. Five moves. Do them this week. Move number one. Assess your stage honestly. Pre stage one, mid stage one, stage two, stage three. Write it down. Be honest. No ego here. Please don't have ego, that doesn't end well, but just be very honest with yourself and whatever it is that you're able to do. If you can get to $100 million quickly, or you do have $100 million, that might be an option to start with a fund. If that's not you, then maybe you build up to that so that you can have an entire career of fund management. Then there's move to define your next stage goal with a number and a date. So stage one, three or more SPV is in 18 months. Maybe you're at stage two. That would probably be something like $50 million cumulative in 18 months, whatever that is put it on your wall so you can see it every day that brings you to a move three. Calculate your runway. How many months can you go without a paycheck, if less than 18, extend it. Save, cut costs, find an income source that funds the journey, under capitalized founders always make desperate decisions. That brings you to move four. Identify three people who are in one stage ahead of you, not five stages ahead, just one stage ahead the manager who just closed fund one teaches you more than Schwartzman can right now, reach out, ask for 30 minutes, learn from the recent scars. As I like to say, all kings have scars. So move five. Once you've done that, you're now ready for move five. Commit to one content output per week, starting this week, LinkedIn posts, podcast appearances, newsletter entries. Trust compounds start compounding now, and make sure you cover that with your attorney of what you can and cannot say based on how you're going to register. 

Ryan Miller 

So let's bring it home, the dream of starting a fund is real. Freedom, sovereignty, building something lasting, becoming the owner, not just the operator. You deserve to pursue it, but pursuing it well is very different than pursuing it fast. The managers who pursued it well, are the ones running real businesses today, taking real paychecks, employing real teams and building real legacies. See, patience is not weakness. Patience is a strategy. Become the operator who earns trust, become the manager who delivers returns to investors. Do that, and a fund launching for you is inevitable. 

Ryan Miller 

So let's land the plane in the beginning. I mentioned there's a free guide. What you can do is click the link in the description and download the complete, How to Start a Fund, a playbook, the four stage path, the waterfall structure, the regulatory comparison, the cost breakdown, the losing strategies, checklist, your compass is all there for this journey ahead. And if this episode gave you clarity, feel free to share it with someone who needs to hear it. And if you're ready to surround yourself with fund managers raising capital and building the right way, check out fundraisecapital.co. You, there you will learn that trust always comes before the transaction, and how to manufacture that like the professionals, so we can help you build that trust that helps you to earn the transaction you do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller 

Wow, what a show, I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better. And make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.