The Pros and Cons of Hiring a Placement Agent

The economics are way better by doing a deal outside of the fund before your first fund, because it doesn't fall into the waterfall. For me, that was the driving factor, because I was starting to lose confidence in my ability to keep the volume of meetings up. Hiring an agent cost you money, to real the market. Even at our small size, this is a seven figure decision,. The LPs do not pay for the placement agent, it comes out of the GP's pocket. So if you had a million dollars in management fees, and you paid a million dollar placement agent fee, you'd have zero revenue for your firm that year.