Humor Me: I want to raise a $100MM fund.
Hello all, 

I understand that raising a $100MM fund is a magnificent undertaking.  But assuming I had the track record, technical skills, market knowledge, and persuasive ability (inclusive of a compelling investment thesis), how exactly would I go about doing this?

From my understanding, I would have to hire attorneys to draft a "Prospectus" detailing the risk and cost per unit in the fund, in addition to strategy, risks, etc.  Thereafter, I would approach equity brokers to basically get meetings with rich individuals, pension funds, etc.  

Of course the returns to LP investors would have to be market rate if not better.  Let's assume I have sufficient skin in the game.  

Has anyone done this before? Could you please share an example Prospectus with the group ?  

In this example,  I would basically want to raise $100MM, but I would not want to register as a REIT.  

I know, I have a lot of research to do.  I know, it probably won't work. But please humor me and walk me through this exercise.  

Thank you all!

-KN
[{"id": "d52qs4n", "text": "Google real estate lp prospectus. There's plenty of them out there. Here's one I found doing the same:\n\nhttp://www.waltonstreetwrecks.org/wp-content/uploads/PPM.pdf", "replies": [{"id": "d532gf6", "text": "Thank you. I couldn't come up with the \"LP prospectus\" phrase for whatever reason. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "d52rtug", "text": "From a practical standpoint, by the time you get to having the track record for a $100M fund, you will also have built a team of accountants, lawyers, bankers, brokers and other professionals capable of putting together the framework of that deal.", "replies": [{"id": "d532fxb", "text": "Practical application.  Awesome comment. Thanks.", "replies": [], "depth": 2}, {"id": "d5a68go", "text": "100MM is not that large of a fund. I've invested in one of that size, and at the time they only had 5 people. They had independent accountants and outside law firm preparing their offering materials.  \n\nThey had a track record of around 10 investments that were funded by the principals and close investors, knocked it out of park on all 10 and that's why I invested.\n", "replies": [{"id": "d5aamvc", "text": "Care to elaborate on the asset/development, strategy and market?\n\nI myself did not think that a $100MM fund is all that large. In RE, large numbers don't equate to complexity. \n\nAlso, are you just an LP investor these days?", "replies": [{"id": "d5ajrn6", "text": "healthcare real estate fund, nationwide, equity investor for developers.\n\nI am a real estate atty and mainly invest on my own in retail real estate. I am an LP in this fund because I have no health care real estate background.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d52tvfc", "text": "Your returns to LP investors would have to be well above \"market,\" and its doubtful that market rate returns mean much of anything here anyway. The funding for this kind of investment vehicle is almost always institutional, as raising that amount of money from private investors would be monumental in scale. Institutional money cares more about investing in safe, reputable teams then making outsized returns - they have been burned by upstarts too many times in the past, and those responsible for investing institutional money are more interested in keeping their job safe then making above market returns. \n\nI have a close friend that is beginning the process of raising a fund. Here is how he is going about it. He wants to do residential, multifamily value-add in SoCal. He started by identifying a couple deals that he knew could be winners, small deals, mostly less than $5m each. He put in some money himself, raised private capital and bank debt for the rest. He would fix up the properties, lease them up at higher rates, refi, and pump the money into the next deal. He now has a couple hundred units under his control, and is almost ready to start courting institutions. Even now, he is mostly being shut out of the big money, as he does not have enough \"institutional experience\" to be worthy of a pension fund allocation. The fact that he is under 40 yrs old also does not help. He has proven he is good at what he does by replicating his business model multiples of times, but that is not all that one needs to be allocated capital. \n\nI think in your case, assuming you have at least a little experience, you would need to do a couple things to attract an institution - (i) put more skin in the game than is considered normal, most likely +- 15-20% of the total AUM. (ii) have a track record of producing returns to investors well above market, whether you measure returns in terms of yield or IRR. (iii) find your way into the old boys network that is institutional capital. You really just need to crack that door open and a whole world of money could be at your disposal in a couple years if you play the cards right. ", "replies": [{"id": "d532f7f", "text": "Very insightful response. Thank you.", "replies": [], "depth": 2}, {"id": "d536jow", "text": "These are good points.\n\nYou probably will need to be introduced by someone who already knows the money guys. If you have no reputation or connection for them you probably wouldn't even get a meeting.\n\nAlso this comment is dead on that they are going to want to see you having skin in the game and taking the risk too so you have an inventive to make sure the fund is a success. For a $100M fund, that means having a pretty significant pool of equity accumulated yourself as well.", "replies": [], "depth": 2}, {"id": "d5im8i9", "text": "Lots of action on value add B- to B+ assets and lease-up plays now that cap rate compression is stalling. Any thoughts on where developers and investors will look next in the cycle.", "replies": [{"id": "d5in7tv", "text": "Yeah - to tertiary and frontier markets. In a desperate search for yield, some investors are going to acquire some assets in markets they aren't familiar with, aren't investment grade, have been passed over by institutional investors for years, or are in the infancy of becoming commercially viable. Then the cycle is going to do what cycles do, and those assets are going to go vacant and they are going to lose their shirts. \n\nAs for developers, they will continue to narrow the acceptable spread they take on projects and try to grow the number of projects they are undertaking to compensate for reduced profitability per job. They will hire a bunch of PM's and engineers and when the cycle does what cycles do, they will be bloated, overstaffed, and stuck holding low-margin projects. \n\nThis shit is so predictable its amazing that we even have to talk about this anymore. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]