This opportunity is for employment, so no management fee. Most of the hedge funds and CTAs we deal with charge either 2/20, 1/25 or 0/30. Most are still 2/20. It is common for large allocators or initial angel investors to get a better rate. I've seen as low as .5/15 for $25mm or more. The idea is to get to $100mm ASAP to attract third party marketers.
Did u ever meet anyone who was funded by a 3rd party marketer? I thought the 100 million level was to pass the institutional interest threshold.
Yes, 100MM is an important level. I said that too. One of our clients grew from around $6mm of their own money to $240mm in the last 7 years. The last $150mm was all from the third party marketers. I've gotten paid for it too, at my old firm. We are not approved for it yet at LS. I only raised about $2.5mm for CTAs and $4mm for hedge funds and managed accounts. Not a lot, but not our primary role. Some we charged a 20% fee and others we got execution dollars. The big guys that can direct hundreds and millions of dollars with phone calls, expect you to raise the first $100mm, and have a full team in place or the large allocators won't review your docs and then meet you. There are a few family offices out there that also do cap-intro. They will invest the first $25mm or so and then market you for a part ownership of the GP. They want to be first in, but are very selective and controlling.