Starting an equity fund

[Paul Ko]

Hi All,

Long time follower, first time posting.  We are getting ready to launch an equity fund for an opportunity we have found.  I wanted to get some feedback to see if our offered returns are "market rate" and to see if we need to change anything to attract investors.

1. Pref payments to investors paid out monthly at 4%

2. 100% profit split to investor to next 4% IRR (total 8% IRR to investor)

3. Waterfall up to next 3% IRR (Investor 75% - Sponsor 25%)

4. Waterfall anything over and beyond (Investor 50% - Sponsor 50%)

Depending on the deal, the investor is looking at 8% IRR at a minimum, and after profit splits they would be looking at between 11% - 18% IRR total.

Any feedback would be greatly appreciated!