How does this business model work? How do they get paid, in your experience?
In a very simple sense: Firm 1 is raising Private Equity Fund 1. Third party marketer is hired to bring in investors to invest in the fund. Third party marketer brings in Foundation B to invest $5 million. Third party marketer gets a certain percentage as a fee from Firm 1 for bringing them that investor.
If you’re talking about hedge funds, horrible. I do business with a lot of marketers who come to me with deals and also have a lot of friends who own their own (top name) firms and all they do is complain about how bad business is. It is possibly the worst time in history to be a HF marketer.
For HFs these guys typically take a cut of fees as well. if they raise 50 bucks, they get a slice of the management fee (and maybe perf) until the money leaves. perpetuity baby!
2009: key word “if”
Eh, guy I know (business acquaintance who is older than me) started a third party marketing firm after leaving an asset management company. 5 years later he is driving a Maserati and fully funding investment manager start ups. Just trying to figure out how he could make that. Most of the business he does is on the institutional long only side, I know that. I guess if you land a billy for some large cap manager you get a decent fee payout? Obviously, that is not happening very often though.
From 2005-1H2008 you couldn’t walk out the door without getting hit in the face with money that someone wanted to put into hedge funds. I could easily see a top tier marketer pulling down 8 figures in that type of market. It’s not happening anymore.
Woo 8 figures!! These dudes are charterholders? My boss worked with some Fairfield Sentry marketers (not 3rd party), he told me that these dudes were 27 years old and were pulling in 800k a year. Pretty sure they’re unemployed right now thou.
Yeah the Fairfield Sentry guys were either downright crooks or some of the stupidest investors in the world.