Michael Bjorn Huseby is an investment fund formation attorney at a global law firm.
He represents both fund sponsors (GPs) and investors (LPs).
In 66-minutes Michael proved to me that he has seen almost everything in the world of funds...
“Investors don’t want to see something they haven’t seen before.”
“Yet some GPs pitch an investment deck with a 7% management fee.”
We discuss:
— Sideletters & waterfalls
— How to choose the right structure for your fund
— The best ways to build relationships with LPs as a GP
— Whether and why you should raise capital on X
Show notes:
00:00:00 - Intro
00:00:10 - will Michael charge a typical fee for the hour of podcast?
00:02:25 - Importance of side letters (an excellent overview for both LPs and GPs)
00:07:30 - why do GPs keep screwing up the “most favored nation provision”
00:10:45 - it’s a lot of sideletter per $300m aum fund (some very obnoxious)
00:11:43 - who pays for a sideletter?
00:15:40 - the most important thing to know about sideletters (red-flags, etc)
00:17:15 - a lot of LPs will invest because of the information and not just returns
00:18:45 - why very large family offices write test checks of $25,000 and not more
00:20:00 - what is a Waterfall?
00:23:25 - Investors don’t want to see something they haven’t seen before
00:25:50 - “forget the 2/20, I’d like to have a 7% management fee”
00:29:05 - why you shouldn't set up a fund without charging a fee
00:32:00 - how to structure your investment fund in a correct way
00:38:28 - Best ways to build relationships with LPs while being a GP
00:43:10 - being truthful about company valuations
00:45:30 - out of 39 investments; only 7 companies gave reports
00:47:43 - step-by-step on how to create a fund (documentation)
00:51:56 - how to recover when you mess up your first fund
00:57:53 - You can market your fund on X / podcast (using 506C)
01:00:10 - don’t promise insane 40% IRR projections
01:00:55 - what can you promote on X; and what can’t you promote on X
01:03:26 - Mikk asks for free legal advice on raising bonds/securities on X
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This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
