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FUND BOUTIQUES & PRIVATE LABEL FUNDS: Possible stumbling blocks when launching a fund for a start-up (“Impressions” – Norbert Wolk, Barbarossa Asset Management)

“The worst path one can choose is to choose none.” (Frederick II)

Unfortunately, raising funds from a startup, i.e. from mostly super-motivated people with sufficient skills, often turns out to be more difficult than one might imagine.

By all means, the key to success is staying persistent even if there are often setbacks and you have to make a fist in your pocket. But that’s just the way it is: the road to the top is rocky.

Stumbling block 1: BaFin “Throw a spanner in the works”……

The first stumbling block is encountered right at the beginning. As soon as the first external communication begins, you almost have one foot in jail. Why? Topic BaFin! One has not thought about it at all in the overconfidence. But one should.

You need, as we have done, a liability umbrella under which you can slip. Which gives you the necessary legal backing and also supports in all matters relating to the fund launch.

Stumbling block 2: The right KVG (German regulated capital management company) – Pay attention to the fees!

The next stumbling block is the selection of the capital management company. Here, too, there are enormous differences. Especially in the beginning, you should make sure that the fees do not crush you and then you cannot deliver the necessary performance of the fund. We have had to gain experience in this area, and it has not always been the best, but that is part of the game.

Stumbling block 3: “You should not look at one another, but look together in one direction”.

In another, the very important stumbling block of the seed money search, I wish everyone a competent and fair partner. It is certainly helpful to offer the seed money provider a shareholding, as the willingness will then increase significantly. It is important to note that you should not accept every partner because you have a company together with him. Everything should already fit, otherwise, the whole project is programmed to fail. One should not look at one another but look together in one direction. Some seed money lenders don’t see it that way, and many also lack the necessary seriousness. It is atrocious when you give 150% and the seed money provider only 10%. The bottom line is that it costs time when you find out that you have the wrong partner. And you don’t part that quickly because you hope it gets better. The best thing is to structure everything, set deadlines, and then act accordingly. Which means: to part with him immediately. And then the game starts all over again…

Conclusion:

Without the right partner, it’s extremely difficult. This concerns on the one hand the administrative level and on the other hand the interpersonal exchange – be it the contact to the seed capital provider as well as the contact to the own partners within the company.

Therefore, I can only encourage every clever person to take certainly a rocky path. In the end, this path is not only instructive but also very rewarding. After all, “The worst path you can choose is to choose none.”


Link to Barbarossa asset management GmbH: www.barbarossa-am.de

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