Introduction

What Is an Investment Fund?

This book is not a fluffy, feel-good guide about getting rich or a collection of filler words. It’s a practical, no-frills manual for getting the job done — without going to jail.

Investment funds can sound complicated (and in some ways, they are), but the goal here is to simplify the entire process of forming and raising them. It doesn’t have to be confusing or stressful. I do this work every day, and I’ll talk to you the same way I talk to emerging managers who come to me for guidance.

Let’s start at the beginning.

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What Is an Investment Fund?

An investment fund is a vehicle that pools money from multiple investors, called limited partners (LPs). The fund’s general partner (GP) manages the investments, while LPs are largely passive.

A typical investment fund invests in multiple assets within a single industry.
Examples include:

• A private equity fund focused on manufacturing businesses
• A real estate fund focused on multifamily apartments in Texas
• A venture capital fund focused on emerging SaaS companies

A syndication is similar to a fund, but it invests in only one asset. Instead of investing in multiple businesses or properties, it holds a single asset. Syndications are also called SPVs (special purpose vehicles), but this book will primarily refer to them as syndications.

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Why Do People Form Investment Funds?

LPs like funds because they offer:

• Diversification
• Potential for outsized returns
• Access to top GPs who often outperform the market
• Tax-advantaged income (in certain asset classes, like real estate)

GPs like funds because they offer:

• The potential to earn significant income
• The opportunity to solve interesting problems
• Multiple streams of revenue (covered in Chapter 2)

Being a GP comes with challenges and stress, but the upside can be enormous.

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What Will You Learn?

This contentis divided into two parts.

In Part I, you’ll learn how to raise and structure a fund or syndication, including:

• How long it takes to raise a fund
• How to structure your compensation
• Who to recruit for your team
• How to choose between a multi-asset fund and a single-asset syndication
• How to choose between a closed-end and an open-end fund
• How to set your fund’s business and legal terms
• How to distribute money to LPs
• How to prepare legal documentation
• How to negotiate with LPs
• How to admit LPs into your fund
• How to call capital from LPs

In Part II, you’ll learn how to comply with the laws that govern investment funds and syndications, including:

• The Securities Act
• The Investment Company Act
• The Investment Advisers Act
• State laws
• Tax laws

Each chapter includes a Fund Trap — a short story about a real (but anonymized) disaster you’ll want to avoid.

By the end of this, you’ll know more than many GPs who have already raised capital (not an exaggeration). When in doubt, use a glossary.

Important: Laws may have changed since publication. Always work with a qualified lawyer to ensure compliance.

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Why Should You Believe What I Have to Say?

At TIL (til.law), we form funds and syndications all day, every day. That’s what I’ve done for years — at major firms like Latham & Watkins and DLA Piper, and now at TIL, a boutique firm focused exclusively on private investments.

I’m also a GP in a real estate fund I helped form. That experience gave me a first-person view of what it’s actually like to build and manage a fund from the inside.

We also run a newsletter at fundamentals.law, which updates and expands upon the concepts in this book. Join us there to follow market trends and new insights.

Enough background — let’s get to the good stuff.
We’ll start with the question everyone asks: How long does it actually take to raise a fund?

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