Cash Flow for Capital Raisers/Fund Managers

[Sam Silverman]

One of the most common struggles for aspiring fund managers -- current cash flow.


Many fund managers are struggling in the short term to produce cash flow for their business.

In a typical structure, fund managers (specifically referring to folks who leverage SPVs to invest into specific deals or funds) -- may earn 1-2% upfront as an acquisition fee and earn the rest of their compensation in a profit sharing split once the preferred return to investors is achieved.

Most real estate projects today are either not achieving their preferred return in cash flow or may not achieve this bench mark for the first three, four or even five years -- at this point, there may also be accrued preferred return that would have to be caught up.

As a fund manager, what other asset classes are you evaluating to help increase cash flow for both your investors AND yourself?

Personally, we are diving deep into buying and operating businesses that potential to conservatively achieve 20%+ cash on cash returns.