How much capital should you raise for a Private Equity Fund?

[Brian Wheeler]

My business partner and I are starting our own Private Equity firm. My main question is when we start a fund, how should we determine how much capital we will want to raise for that fund? Is it based on the size of the portfolio we want? Is it based on how many investors we have? Or is it just a number we feel we want to raise? 

[Jillian Sidoti]

@Brian Wheeler - I think I have some good advice on this. The answer is simple: as much as you can spend responsibly. 

The thing is, you don't want to make your first fund "too big." The analogy I always think about is moving into your first house: you realize quickly things you wished you considered before you bought the house. Like, you don't like where the outlets are placed and you will look for that in your next house. It's the same with a fund  - "oh I wish I charged this fee; or set up this structure; or allowed myself to buy these assets." So don't make your fund too big or ambitious, because you can always make a better, second one.