SERVICE PROVIDER SPOTLIGHT features:
David Gerber, CEO, Wolfgang Capital
—CFO & ADVISORY SERVICES

David Gerber, Founder and CEO of Wolfgang Capital, talks about the costs involved in running a fund management business. Plus, what it takes to operate a heathy, successful fund management business that attracts allocators. He shares common misconceptions, pitfalls to avoid and key considerations for new managers.

SHOW HIGHLIGHTS

In this episode, David and I talked about:

    • Typical all-in fund management business costs — from launching to maintaining.
    • Common misconceptions new managers typically have about running a fund.
    • Competitive fee structures expected in today’s market.
    • How firms can creatively raise ‘pre-AUM’ working capital.
    • Pitfalls to avoid.
    • The danger in thinking ‘I can do this all myself.’
    • Why taking a 2- to 3-year view of your business is critical.
    • Characteristics of a great ‘fit’ for Wolfgang Capital.
    • The key ways that Wolfgang Capital differs from their peers.
    • Important considerations for launching and running a fund.

KEY QUOTES/TAKEAWAYS

4:20 | “…it’s really to allow the portfolio manager and the investment professionals to focus on investing because the biggest driver of these firms, whether it be growth and ultimately success, is going to be performance. If the portfolio manager is distracted with its business, then, you know, while I can’t quantify it, it’s really going to take away from performance in some in some way.”

5:10 | “I think the biggest misconception is, “Hey, what do I need this for? I can just do it myself. It’s so simple.” And as we’ve learned with many of our engagements, where the business starts, is not usually where the business ends. And it really evolves because each fund is very unique. Each firm is very unique, which requires an individual skill set.”

7:57 | “From a fund perspective, we like to keep fund expenses below 50 basis points. I think that’s sort of the pain point for investors.”

16:04 | (on common mistakes fund managers make) — “…underestimating the cost of running this business.” — “…a lack of willingness, or the ability, to invest in the business.” — “…thinking they can just do everything themselves.”

20:12 | “We tend to look at a two- to three-year view of the business, because what a business looks like day one is generally going to be very different than what it is two to three years from now.”

23:20 | (on what sets Wolfgang apart from other CFO & business advisory services) “We have an IR function, where we help manage the capital introduction to the investment banks, and it’s a very heavy lift.”

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FULL TRANSCRIPT

Jennifer Bruno  00:06

Welcome to Hedge Interview. This episode is part of the service Provider Spotlight, which features insights from important service providers that support fund managers. My guest today is David Gerber. He is the founder and CEO of Wolfgang capital, which provides outsourced CFO functions including consulting and advisory services for investment managers.

David has over 30 years of accounting and finance experience, including more than 25 years working with hedge funds, private equity and traditional asset managers.

Before founding Wolfgang capital, David served as President, CFO and Partner at several successful industry leading firms including SAC Capital Advisors, Great Point Partners, and Daruma Asset Management.

He has also co-founded and built startup investment firms from 10 million to 3 billion in AUM. David has a deep understanding of business building, strategy, capital markets, execution, taxation, and a wide range of investor requirements, all of which are essential for operating a successful fun business.

Welcome, David.

David Gerber  01:19

Thank you, Jennifer. It’s great to be here today.

Jennifer Bruno  01:21

First, tell me about your inspiration for founding Wolfgang capital.

David Gerber  01:25

Sure, so it really dates back to my experience, going back to SAC, and prior. I started out in public accounting, which is a service organization serving various clients.

When I transitioned to private industry at SAC, I realized that I now had one client, one client being the trading desk, and our investors.

After spending my career of, as you mentioned, almost 30 years as an operator, I founded Wolfgang to service new investment managers who are looking for a head start to get their funds started and to run at an operating efficiency that’s consistent with the investment program,

Jennifer Bruno  02:07

Did you find that there was an unmet need in the marketplace for you know, this type of service?

David Gerber  02:16

Absolutely, I always have. You know, many CFOs of investment firms are really controllers. They provide, and this has evolved over the years. You know, it’s really a controller function — books and records, NAV, taxation and compliance.

And what I’ve always modeled my career on is being business value-add. And I felt that that was missing in our industry, even with the outsourced CFO firms that are out there who are very good, but they focus more on the blocking and tackling rather than the strategic and advisory relationship that Wolfgang has with its clients.

Jennifer Bruno  02:51

I sometimes find that emerging managers will say to me, or you know, new investment managers will say, I have a fund administrator, why do I need a CFO? They don’t necessarily understand how critical these services are to their business. So how would you define the difference between… these are questions I get, so it’s helpful to clarify, “why do I, why can’t a fund administrator do it?”

David Gerber  03:22

Sure. That’s something that’s certainly evolved over the years. But, you know, they really are two different functions. I think the fund administrator is the official books and records of the fund. It’s an independent function that’s provided with you know, candidly, it’s it’s best practices and industry norm to have a fund administrator, and more importantly, an independent fund administrator.

You know, from a CFOs perspective, it’s really an oversight function, because somebody has to oversee the books and records and the calculation of all the NAVs and numbers that are going out to investors. Because, you want to ensure, you know, accuracy and integrity of the numbers. And that’s just one function of the CFO, but it is an important one.

Jennifer Bruno  04:03

Isn’t it also true that a fund administrator really oversees the, you know, client statements and the fund aspect, but not necessarily your business? So the CFO oversees everything, right? For the health of the overall business. Right?

David Gerber  04:20

You’re absolutely right. And, you know, the there’s two sides to the investment management firms. There’s the fund side, and there’s the business side or the management company, as it’s generally known.

The fund administrator oversees all the fund interactions, investor interactions, as you mentioned, statements and NAV generation. From a CFOs perspective, the CFO takes it from there and oversees the entire organization.

And it’s really to allow the portfolio manager and the investment professionals to focus on investing because the biggest driver of these firms, whether it be growth and ultimately success, is going to be performance. If the portfolio manager is distracted with its business, then, you know, while I can’t quantify it, it’s really going to take away from performance in some in some way.

So we try to take it from as a CFO, which is one thing I always did as an operator, and now what we provide here at Wolfgang, is we take a holistic view of the business, and we look at it as a standalone business. The business just happens to be Investment Management. And that’s the way we approach every engagement.

Jennifer Bruno

And so what are some common misconceptions that fund managers have when they engage with you?

David Gerber 

We get that a lot. And I think one of the things is the transition from, in our business, and in any new investment management firm, it’s usually the person is a number two or number three, as an analyst, serving a particular role, generally limited to the investment side.

When they found their own firm, they’re now an analyst, a portfolio manager, a risk manager, and a business owner and entrepreneur who’s responsible for staff. And that can be a huge undertaking.

You know, one of the things that we look at in the success for new managers is to have as little change as possible from their prior experience into this new experience of being a business owner. So, you know, I think a lot of new managers, they’re driven, they really want to do things themselves, and they may not have the experience to do it.

So I think the misconception is, “I may not need this. My businesses really simple.” And, you know, that may have been true, you know, I’m dating myself here, you know, decades ago. But, you know, today, there really needs to be an independent function between the business leadership and business running, and the portfolio management, including risk.

I think that’s the biggest misconception is, “Hey, what do I need this for? I can just do it myself. It’s so simple.” And as we learned with many of our engagements, where the business starts, is not usually where the business ends. And it really evolves because each fund is very unique. Each firm is very unique, which requires an individual skill set.

Jennifer Bruno  07:13

Right, right. I mean, every new investment manager is really like a startup. And there’s a lot of moving parts where when somebody comes off of, out of another fund, or a, you know, investment bank, or whatever they springboard it off of, to do their own business. They’re usually fairly unaware of all of those business aspects, which are really critical, and the costs as well. So that’s my next question, what are the typical costs of a fund management business that that managers may or may not be aware of all the things that you would be helping them oversee as part of their business?

David Gerber  07:57

Sure. So we like to break down the business into really who’s paying for these expenses, who’s paying for this business, and that’s generally broken down and what’s known as fund expenses, which are generally borne by the investors.

And then management company expenses, which are an operating cost in the normal course of business. So as an example, there are fairly standard costs that get passed on as, as a fund to the investors, which is the startup costs, which I think that’s one of the things you’re referring to is one of the largest costs of starting a firm, and that generally involves legal and accounting consultative approach to do the fund documents, the fund structure, the fund formation.

And that generally could run several $100,000, depending on the complexity of the strategy, whether it’s a domestic or an offshore, otherwise known as a master feeder structure or a mini master structure. So it really depends, but generally, those expenses are borne by the investors. And to sum that up, the expenses that are borne by the investors are typically the startup costs, including the legal and accounting that I had mentioned, the ongoing fund administration costs to do the monthly NAVs and the the annual audit and tax preparation for the underlying fund that includes K1s and delivery. So those are generally broken down as fund expenses.

From a fund perspective, we like to keep fund expenses below 50 basis points. I think that’s sort of the pain point for investors. Whereas, you know, they say, “Look, we’re paying a management fee, but now we’re paying all these other expenses.” What I’ve mentioned earlier, is really standard and what is passed on to the investors, there can be some element of research and even accounting and some other costs, but generally, we tend to limit it at 50 basis points.

On the other side, is the business of the business. And that’s all of the normal operating costs of the business, which is things like payroll, and rent and research, and professional fees, and insurance and office expenses and things like that. Those are what are offset against the management fees that are charged to the fund.

Typically in an early fund, you know, we, if they’re not cashflow breakeven, if you think about a standard 2 and 20 fund, which is a little dated, but for simplicity, we’ll, we’ll keep it at that. So $100 million fund would have $2 million in revenue. That is more than sufficient to run the business, including staffing.

You know, our experience has been of, all the costs that are involved in the management company, roughly two thirds are personnel related. So that includes analysts and staff, and including us as CFO. The other costs are really incidental.

And the beauty of our business is the financial scalability. Those costs don’t necessarily exponentially increase with your assets under management. When we look at a startup firm, which is usually, you know, 2, 3, 4 people, we estimate cost between $1M and $1.5M.

Jennifer Bruno  11:16

Well, since you mentioned the 2 and 20, you know, you and I have, we know each other I’ve worked with you and I, I’ve learned from you that today, in order for a fund business to kind of get off the ground, you’ve been really helpful with new investment managers that need to kind of learn what’s expected as a new fund manager in terms of fee structure.

To build AUM initially, they need to be more flexible on fees. I end up passing that on to managers, because they just expect that right out of the gate as a brand new manager that they can command 2 and 20%, which today doesn’t go over as well.

What do you advise to new investment managers about fee structure? And what should they keep in mind as they’re going to launch a fund, about fees

David Gerber  12:15

Jennifer, I think you and I can agree the 2 and 20% model is very dated, which I guess just shows my years of experience. So a typical fund would charge 1 and 1.5%. But I think it’s really more important to look at it conceptually, from the investors’ perspective. The investors want to know that the managers are generating alpha and generating performance, and they’re entitled to get paid from that, what they don’t want to do is have this massive profit center, where the manager can just sit back and convert from a performance machine to an asset gathering machine. And that really can be become very dangerous, you know, as funds grow, that they’re really focused on preservation of assets rather than performance.

So it’s, I think it’s really important to be flexible. Again, I think the market is 1 to 1.5%. There’s usually some sort of founder share or anchor share class. You know, I think one of the things we’ve done really creatively is rather than an AUM focus, we focus on a working capital focus. And as an example, you know, what’s really important is these businesses want to survive and thrive.

And one of the things we’ve done with one of our clients, which was incredibly creative, but it really came from the managers, they solved the working capital issue first, by raising pre-AUM working capital. And they sold an interest in their firm to entitle them to five years of working capital. And that enabled them, it was really creative on their part. And we learned a lot from it. But what enabled them to do was to have a five-year runway to build out their firm and prove their investment program. And they’ve been quite successful.

Jennifer Bruno  14:03

Wow, that’s great. And it’s those types of arrangements in the beginning that can really make a difference and how it for a fund manager to kind of get critical lift off and become successful. Because it’s a hard start in the beginning, and a lot of those, the costs of running a business can really hamper a fund’s success. So do you ever, do they get creative on the other end of, on the performance side?

David Gerber  14:31

Yeah, I think the key word here is flexibility, and creativity. So while 20% is certainly accepted, there’s so many different ways to calculate a performance fee. Investors generally want to pay for an on alpha generation. There could be something as simple as a 20%, which is really more of an established manager concept.

But there could be introduced things like hurdle rates, you know, deferred compensation in terms of getting paid over a two- or three-year period. It really depends. It also depends on the strategy. You know, if there’s the supply/demand in the strategy, if it’s a very generic strategy, it’s going to be very difficult to stand out from your peers.

What we’ve seen is everything from, something we saw in one of our clients, we did an anchor share class, which was for Day One investors with a longer lockup. So there’s, in addition to performance fee managers get paid in a bunch of different ways, you know, in the different terms of the offering.

You know, another one is the lockup as I mentioned. Typically, investors, if it’s a less liquid strategy, or if they’re willing to commit capital for a longer period of time, there’s usually some concession on economics generally, in the management fee and the performance fee, in this case, the performance fee.

Jennifer Bruno  15:58

Okay, and what are some common mistakes that managers make?

David Gerber  16:04

Yeah, so we see it all the time. And, you know, one of the good things is with our experience, the managers are able to take advantage of that, by avoiding those mistakes. I think the first thing I would say is, you know, understanding that it’s important to bring in, align the business objectives with the performance objectives, and to start early in the business.

You know, a lot of fund managers say, “Oh, I want to raise assets, first. Maybe when I raise $50M or $100 million, then I’ll think about a fund administrator, or a CFO, or an accountant.” You know, that’s, and we found that’s not the case, but we see it over and over again.

Another thing that we see is, underestimating the cost of running this business. As I mentioned earlier, this is a business and, using a small cap manager as an example. At the end of every interview with a new manager, and we like to focus on their story, everyone has a story, tell us yours. And that’s one of the things that makes the magic come alive. So, the thing there is they underestimate the costs.

One of the common mistakes is the lack of willingness, or the ability, to invest in the business. So again, like I mentioned earlier, these are businesses, and we say to every manager, at the end of every interview, would you invest in this business? Because they’re, in the end, they’re in the business of evaluating businesses every day as part of their job. So I think the first thing is the lack of, or the willingness or the ability to invest in the business.

I think the second thing is that they can just do it themselves. And then as I talked about earlier, that’s just a big distraction for the manager, which can hurt performance. You know, ultimately, what happens there is the manager gets distracted with business issues, staffing issues, working capital. So we really want the manager, as everyone does, to maximize the chance of success, to focus on the performance in the portfolio and his or her staff.

Those are some of the common errors that we’ve seen, that we tend to avoid. And one of the examples that one of our advisors on our advisory board has said to me is one of the good things about Wolfgang is when he explains it to managers. Think about, like we’re the captain of the ship. And you know, the portfolio manager is the owner of the ship, but we’re the captain of the ship, and we’re steering and we’re avoiding all the different rocks that are at the bottom of the ocean.

We don’t want that manager to hit those rocks. We’d rather have them avoid those rocks to maximize success, and that again, so that they could focus on performance. I think that’s one of the one of the things that we do.

Jennifer Bruno  18:59

I also know that you have helped new managers sort of build out their team. And from my perspective, having talked to, I do interview family offices in the Investor View series, and I know from my own past expertise and as being a marketing person in the field, and just interviewing family offices as well on Hedge Interview that one of, one thing that’s really important is the management team and building out your team because they’re buying into not just the strategy, but obviously the people and the manager as well, as his team.

So I’ve heard that a red flag for investors is when there’s a lot of turnover. The management team itself is a really important thing for investors. I know that’s something you cover as well — helping them understand the team aspect and building out their team. You’ve taken an individual who has, who wants to launch a fund. And you’ve, I’ve seen you help build out teams. And how do you go about that, knowing that’s important to investors as well?

David Gerber  20:12

Sure. So I think it starts with the manager, the manager themselves. This is their firm. And one of the great things about doing startups, which is something that I’ve enjoyed most of my career, is you have a blank sheet of paper to design a business in the way you think it should be run. And that includes staffing.

We tend to look at a two- to three-year view of the business, because what a business looks like day one is generally going to be very different than what it is two to three years from now. And as much as everyone says, “Oh, no, it’s very simple. I’m going to have two analysts, and I’m going to have an office manager and a CFO, and I’m going to manage a billion dollars.” It’s different, and it evolves with the manager’s needs because of that transition from being an analyst and now a portfolio manager and a business owner.

I think that’s really important. And what we do, as I mentioned, we take a three-year outlook. And we see, we’re taking this serious as a business. How is it going to be supported at different AUM levels? What if we introduce a new strategy to the portfolio, to the firm, I’m sorry.

We tend to look several years out, and we try to extract that information from the manager, to allow them to think not just about today, but about down the road, how their business will work.

Jennifer Bruno  21:37

Right. And do you find that, so this is sort of a two-part question. Do you work with, is there a typical fit for Wolfgang capital? Like do you work with, are there, is there, what would you consider would qualify as a great fit for Wolfgang?

And then the other part of that, I bet that there are different operations, some operations are maybe more expensive than others in terms of the fund business. Off the top of my head, the breakeven for a private equity firm is going to be way higher than a single, a different type of strategy. That’s one of the higher, higher end.

So who do you typically work with?

David Gerber  22:22

Yeah, great question. You know, and I think it’s based on our experience, as operators of these firms, we tend to focus on equity-based managers. And we find those are the most simple in terms of the operational support so that we can really focus on the strategy, vision and execution of the business, and that includes growth.

We tend to focus on Equity and Equity Long Short. And we also focus on managers who are newer in their lifecycle. We’ll call them startup managers. While we do conversions, and we have taken clients from other operators in our space, we like to do things right the first time. So we would prefer a new manager in the Equity Long, Short space. And there’s plenty of opportunity there.

Jennifer Bruno  23:10

And how would you say, your type of business different, how does Wolfgang differ from your peers in this particular space?

David Gerber  23:20

Sure. Another great question, and I love speaking about this. It really goes back to my career. You know, many CFOs of funds are incredibly competent, they come out of public accounting, much like myself, and they’re really controllers in CFOs clothing.

I think the amount of CFO work relative to controller work is probably about a 20/80, you know, 20% CFO work 80% controller work, which lends itself well to the outsourced model.

I think one of the things that differentiates our service is a couple of things. We do the basic blocking and tackling, as you mentioned earlier, we oversee the fund administrator, we oversee the audit, we oversee the tax.

But the things that we do, really goes to our careers in our experience. We have an IR function, where we help manage the capital introduction to the investment banks, and it’s a very heavy lift. So instead of hiring a full time person, as a junior IR person, we have the experience of having raised billions of dollars over the course of our careers.

Now, I want to be clear, we’re not fundraisers, but we know how to manage the process. And that dovetails nicely into the second thing that we do that’s very different is we represent all managers in the due diligence process, the operational due diligence.

Not only will we prepare the Due Diligence Questionnaire, which is fairly standard, based upon spending time with the manager. We also do a visual operational due diligence presentation, much like an investor presentation and investor deck. We found that to be very useful in presentations to consultants and firms like Albourne and Beaumont in the operational due diligence function, to really help bring that capital across the finish line.

Those are two things that, we’re focusing on the business, and we know that performance is the number one driver of long term success, but the firms need to be viable as businesses. So it tends to focus around the investors and the investor support. And I don’t really know of any other firms who are doing that today.

Jennifer Bruno  25:32

I mean, honestly, knowing you, and knowing how you have helped investment managers, I don’t know how, honestly, it’s like having a coach, or, you know, with all of the knowledge that your team brings to an investment manager, and to help them grow their business.

Having that kind of guidance that your group provides is, it’s just so helpful for an investment manager who’s usually unclear and unsure about all of these functions and how to navigate them.

What you provide, what Wolfgang provides is an amazing service. I have enjoyed knowing you guys over the years and watching the firms that you work with grow to become really successful. That’s always an exciting thing.

So when a manager chooses to work with you… I know, you’ve just said how you’re differentiated, but what is the thing that usually clicks? Why do you think they choose you?

David Gerber  26:46

Sure, I think it’s several things. One is our experience, we’ve sat in the seat that they’ve sat in. As opposed to just spending time as a service provider, we’ve been general partners, we’ve been allocators, and we’ve been CFOs, and CEOs. We have the experience to walk the walk and talk the talk. And that’s been really valuable.

The second thing is we take a very commercial approach to these firms. We focus less on the investment strategy, which it’s important, but we focus more on the commercial approach to the business. Is this going to be a successful business over the long term? And that’s been our approach. And I think that resonates well with managers, because that’s new territory for them.

They’re really focused on investing most of their careers, this is a new business, they’re, they’re now a business owner. And they want to know that they have somebody with the experience and the judgment, to really help guide them, as it is their firm. I think that’s really important.

The other thing is, we can work with managers at any late stage in their lifecycle. You know, we can do startups, we can do multi-billion dollar firms, you know, which we tend to go into an advisory capacity, which is one of the beauties of the Wolfgang business model.

We want to grow with the manager, but ultimately, they could need a full-time person in house. We’ll help interview, train and hire that person to be a very smooth transition for the investors. And we consider that a success. And many times, we’ll go on the advisory board after that.

We think the success is, we get a manager started for several years, they can build their business, they can focus on performance, they can focus on developing a track record, and then ultimately see, “Oh, we’re three years in already, let’s take another fresh look at our business and see where we are for the next stage of growth.”

Jennifer Bruno  28:36

Right. Now, I know there are managers that would like to work with you that, you’re not able to work with everybody or don’t want to work with everybody, because of them not being a good fit. What would be some things that are a ‘no’ for you?

David Gerber  28:52

Sure. That’s one of the beauties of being a completely independent firm, we have no outside ownership. We’re completely independent, owned by the employees who work at Wolfgang.

A couple of nonstarters — we define something we call the Wolfgang conditions for success, which is something that we’ve written based on experience over the years. And I can give you a few examples. The first is the level of commitment that the manager has to the business. There has to be some element of financial success, to bring the manager up into this point. You know, it can’t be you know, I have no experience, I just want to run a hedge fund. It doesn’t work. It won’t work, investors will not subscribe to that.  

We want to show a track record of experience of various market cycles, typically eight to 10 years of experience from the investment side, we want to know also that the business is well funded. We talked about working capital earlier. We can help solve that problem and address it to make sure that financial runway is there for the manager to deploy his or her strategy. I think that’s really important.

I think it goes back to the commitment of the manager. Are they really serious about doing this? You know, what’s their story? Do they have a clean record? Does it make sense? There’s so many managers we have the experience of speaking with is that they’ve been managing a billion dollars for the last 10 years, they annualized 20%. And they want to put a half a million dollars into the fund. Something doesn’t make sense.

Unfortunately, or fortunately, in our business, we’re judged by our record, and that’s generally a financial record of performance and compensation. Financial commitment from a manager is really important. If that’s not there, it’ll probably be a nonstarter for us.

Also, we have to know we can add real value to the firm. In a quantitative strategy, blackbox, you know, quant strategy, we’re probably not going to be a lot of value. It’s real model driven, a lot more interaction with the portfolio managers, which is why we focus on the equity side.

Jennifer Bruno  31:12

Right. Okay, that makes sense. And what are the costs? What is the average cost of working with, what would it cost a manager to work with Wolfgang Capital?

David Gerber  31:22

Sure. As I mentioned, no engagement is the same. They’re all unique, but we can certainly provide ranges. We work with new managers and costs and budgets are really important.

The first thing I would say is, I think when evaluating whether to insource, or outsource, and we’re a fraction of the cost of insourcing, which will be north of half a million dollars, you know, between all the benefits and costs and technology.

With Wolfgang, there’s no hidden costs, we typically work on a fixed fee that starts at about $12,500 per month, or $150,000 annual. And that gets you a whole team of people, and there’s no hidden costs. Depending on the engagement and the complexity, it could be more and depending on the level of service that you want, whether it be the IR function, the compliance function.

One of the great things about our offering, which we’ve learned over the last couple of years, which we’ve now incorporated. We got a question, “Hey, this sounds like a great offering, do you do compliance?” Well, we’ve partnered with a firm called Pillar, Pillar Compliance, founded by David Lombardi, a very experienced compliance professional, and that’s also something we can offer to our clients. It is an additional cost. But, you know, we like to do no surprises to managers.

I’ve learned over the course of my career being an operator, general partners, and business owners do not want surprises, certainly on the expense side. We’re a fixed cost model, which is very different than our peers.

You know, we don’t get paid hourly, we get paid to get the job done. It’s really important when looking at other providers and Wolfgang, to know what your total costs are going to be. Some firms advertise lower costs, but it’s usually capped at a certain amount of hours per month. That’s not the way we operate. Ours is typically a fixed cost.

And we’re flexible. We’ve actually done some equity deals with managers, if we thought there was real promise in the manager, but they were strapped on cash, we’ve done revenue share deals as well. That’s the other thing with Wolfgang is we can be incredibly flexible.

In our fee, you know, the way we put our fees together, we want to work with managers over time and that relationship can evolve over time.

Jennifer Bruno  33:53

Right. And another, as you mentioned about the compliance function that you can plug managers into, I remember that you have pretty much a full suite of other services, according to what a manager might need.

There’s your service, but you have such a great network. If an investment manager needs a particular service you have at the ready, a pretty strong network of other providers that you plug people into. That’s something an investment manager would plug into by working with you.

Those costs are separate, obviously, but you can help them get aligned (with) the additional services that they need, that they sometimes are not aware of. That’s, I would think, another advantage of Wolfgang Capital.

David Gerber  34:53

We’re really proud of those relationships that we’ve developed, and we continue to work with over time, but we know what successful firms look like, we know how they operate. And we’ve been fortunate enough to be part of them.

We’ve also been fortunate enough to be part of things that didn’t work. So we avoid those types of mistakes. When you spend 30 years, whenever you say it, it makes me feel really old. But you know, 30 years of experience in this business, I think back to my days at SAC. I’m approaching my 30 year anniversary of starting there, which was an incredible experience.

We want to set managers up for success, and ultimately, that is our goal. And that’s how we judge ourselves if our managers are successful.

It’s also important just to be reminded, performance is the big driver of success in these firms.

It’s really, really important,

Jennifer Bruno  35:50

Undeniable, 

David Gerber  35:51

You can have the best business plan in the world, you could have the greatest service providers, you could have Wolfgang Capital, but without performance, it’s going to fall flat.

We help support those managers, but again, we’re freeing up their time to allow them to focus to hopefully generate good results and good performance over time.

Jennifer Bruno  36:14

Right. So you just kind of more or less answered my last question, which is what helps an asset manager become a success from your point of view? And I think that performance component is the bottom line really? Right?

David Gerber  36:29

Yeah, absolutely. I think the most important thing is patience. When a manager starts, you know, “How long is it going to take to raise capital? How many meetings do I have to take with an allocator?” The answer is, it depends.

How unique is your strategy? What is your background? Do you have a track record that’s portable? What is your commitment to the business? There’s so many factors.

But I think the biggest thing is patience, which is why we tend to have a two to three year working capital relationship with the firms, meaning, they really need to have two to three years of working capital, to deploy their strategy, to have the financial runway to make it work.

If they don’t have that, it’s going to be a real challenge. Because you know, managers are human, believe it or not. They’re going to feel financial pressures and other things that are related and unrelated to their firm.

Patience is the number one thing that we try to remind managers of, and we try to set up a plan, we spend a lot of time with the managers. We want to be their business partner and guide them through the success of the careers and the things that come up that are unexpected. I think with our experience, we have that, we have that covered, we can handle pretty much anything.

Jennifer Bruno  37:46

Right. I mean, the experience of you and your team, and the things you’ve learned over the years is what’s going to help them avoid pitfalls. That’s why I brought up those mistakes that managers who don’t know and kind of run into without the guidance to say, “No, I don’t think you should do that. Go this way instead,” is a huge advantage of working with Wolfgang Capital.

Thank you so much for being here today. All of the insights you provided are really helpful for new managers who are looking to get started in the space and to understand better, what they need to know to be a success.

So thank you so much for joining us today.

David Gerber  38:30

It was it’s been my pleasure to help your viewership really get something out of it. And we encourage them to contact us and we want to hear your story.

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