Carrying the weight

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Recently, a guy I see almost every day asked me about potentially investing with us. To be nice, he caveated his request by making it clear he would understand if I preferred not to take money from someone I have to see all the time, in case things go wrong.

Because I’ve never solicited capital from anyone in the particular context in which he and I interact, he kind of threw me for a loop, and I had to pause to really consider whether I was, indeed, confident I was willing to take his money.

The conversation went on and eventually finished, but I kept chewing over what he had said. It wasn’t until the next day that I had the following realization: Ever since my second deal, which was funded by my best friend from highschool, I have been responsible for acting as a steward of my friends’ and family’s capital.

To illustrate, here’s a breakdown of the capital in Adaptive Realty Fund 1:

Member %age
Close friend from Andover 9.80%
Close friend from Andover 14.01%
Close friend from Andover 7.00%
Parent of close friend from Andover and Princeton 2.80%
Close friend from Princeton 3.50%
Close friend from Princeton 4.20%
Me 2.80%
Friend of close friend from Princeton 2.80%
Friend of close friend from Princeton 1.40%
Friend of close friend from Princeton 1.40%
Jon (my business partner) 0.28%
Family office introduced by my accountant 50.00%
Total 100.00%

In other words, I have been living with this weight since the beginning. Here is how:

  1. I have only ever taken capital from people who can afford to lose all of it without any change to their standard of living; and
  2. I have warned them before they invested, both verbally and in writing, that there is a chance they could lose all their money; and
  3. I have worked my ass off, in every way I know how, to ensure that I did not lose their money

So far, so good.

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