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:
- 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
- I have warned them before they invested, both verbally and in writing, that there is a chance they could lose all their money; and
- 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.