Digital Social Hour – Episode: How to Start a $50M Investment Fund (From Scratch!) | DSH #1198

Release Date: February 22, 2025

Host: Sean Kelly
Guest: Bridger Pennington
Managed Assets: Approximately $50 Million
Type of Funds: Blockchain Investment Fund & GP Stakes Fund

1. Introduction to the Episode

In this episode of Digital Social Hour, host Sean Kelly engages in an insightful conversation with Bridger Pennington, a seasoned fund manager known for launching multiple investment funds from the ground up. The discussion delves into the intricacies of starting a substantial investment fund, navigating capital raising challenges, and understanding the broader financial and geopolitical landscapes that influence investment strategies.

2. Bridger Pennington’s Journey to Fund Management

Bridger shares his unconventional entry into the world of investment funds, highlighting a pivotal moment when he decided to pitch his fund to his wealthy father.

Bridger (00:00): "I went and pitched my dad and he emphatically said no. He said if I invest in your fund, it would ruin the experience of you raising money on your own."

Despite the initial rejection, Bridger's perseverance led him to successfully launch three funds and initiate a fourth, with his father eventually investing for the first time in Bridger’s funds seven years later.

Bridger (02:00): "To this day he's invested in a single fund I've done."

Currently managing a $50 million portfolio, Bridger operates both a blockchain investment fund and a GP stakes fund, showcasing his versatility in the investment domain.

3. Overcoming Capital Raising Challenges

At just 22 years old, Bridger faced significant hurdles in raising capital due to his age and lack of a formal education in finance.

Bridger (02:38): "I'm 22 years old, I have no tracker, no college degree. Like, why would you invest with a 22-year-old?"

His father’s advice became instrumental in his approach:

Bridger (03:07): "Focus on the deal. If the deal is so good and you can outline every risk and every opportunity... people may look past your youth."

Using a compelling example, Bridger illustrates the importance of presenting lucrative deals to attract investors, emphasizing thorough due diligence.

4. The Imperative of Due Diligence and Fraud Prevention

A significant portion of the discussion revolves around safeguarding investments through third-party audits and administration to prevent fraud.

Bridger (06:16): "Fraud. We've seen a bunch… people steal money, especially on small funds."

He underscores his strict investment criteria:

Bridger (07:13): "Do they have third-party audits? Do they do third-party administration?"

This stringent approach has earned him the trust of major investors, setting his funds apart in a crowded marketplace.

5. Private Funds vs. Mutual Funds: Performance Insights

The conversation shifts to the performance metrics of various fund types, comparing private equity, venture capital, and hedge funds to traditional mutual funds.

Bridger (05:10): "Tony Robbins… private equity versus the S&P 500 over the last 30 years has 4 or 5 X'ed the returns."

Highlighting the superior returns of private funds, Bridger notes that only 40% of all funds outperformed the S&P 500 last year, whereas top-tier private funds consistently deliver exceptional returns.

6. The Dominance of Major Investment Firms

Bridger discusses the overwhelming influence of giants like BlackRock, Vanguard, and State Street in the global financial ecosystem.

Bridger (10:45): "BlackRock and Vanguard are the two largest owners…"

These firms manage approximately $22 trillion in assets, wielding significant power over Fortune 500 companies by influencing corporate governance through their substantial shareholdings.

7. Market Manipulation in Traditional and Crypto Markets

Addressing concerns about market integrity, Bridger cites historical instances of manipulation and draws parallels with the burgeoning cryptocurrency sector.

Bridger (09:26): "Bernie Madoff… never did an audit."

He warns about the ease of manipulating smaller markets like crypto, given their relatively nascent state compared to traditional markets like gold.

Bridger (16:51): "If JP Morgan can manipulate the $14 trillion gold market, imagine the $3 trillion crypto market."

8. Geopolitical Influence through Financial Power and Military Might

A deep dive into the interplay between financial dominance and military strategy reveals how the U.S. leverages its economic power alongside its formidable naval presence.

Bridger (11:58): "The dollar is doing just fine now… it's backed by 14 aircraft carriers… backed by a trade embargo."

He elaborates on the strategic use of aircraft carriers to assert U.S. dominance in critical regions, influencing global trade and political alignments.

9. Cryptocurrency and AI Investment Strategies

Bridger shares his cautious optimism about investing in AI and cryptocurrency, acknowledging both their potential and the inherent risks.

Bridger (19:01): "If AI is really smart, it would play dumb… and then wake up one day."

He opts for a diversified approach, spreading investments across various AI and crypto companies to mitigate risks.

10. The Importance of Family and Personal Fulfillment

Shifting gears, Bridger emphasizes the paramount importance of family over material wealth, sharing personal anecdotes about his own family life.

Bridger (38:09): "Your biggest flex you can have in life is an amazing family…"

He believes that building and nurturing strong familial relationships offers the most enduring form of success and fulfillment.

11. Networking and Mastermind Groups for Success

Highlighting the value of continuous learning and networking, Bridger discusses his investments in high-tier mastermind groups led by influential figures like Russell Brunson.

Bridger (41:59): "Getting in the right room with the right people… winners always find an ROI and losers always find a negative."

These groups provide access to exclusive knowledge, connections, and strategies that propel his investment ventures forward.

12. Conclusion and Resources

Towards the end of the episode, Bridger directs listeners to valuable resources for aspiring fund managers and investors.

Bridger (43:35): "Fundlaunch.com… we have a full free course on funds."

He encourages the audience to utilize these platforms to educate themselves on launching and managing successful investment funds, emphasizing transparency and integrity in the investment process.

Key Takeaways

• Persistence Pays Off: Despite initial setbacks, continuous effort and strategic decision-making can lead to substantial success in fund management.

• Due Diligence is Crucial: Ensuring third-party audits and administration safeguards investments against fraud and builds investor trust.

• Understanding Market Dynamics: Recognizing the performance differences between various fund types and the influence of major financial firms is essential for informed investing.

• Geopolitical Awareness: Financial strategies are deeply intertwined with global politics and military strategies, impacting investment landscapes.

• Personal Fulfillment Over Material Wealth: Building a strong family foundation provides lasting satisfaction beyond financial achievements.

• Continuous Learning and Networking: Engaging with mastermind groups and educational resources is vital for sustained growth and success in the investment field.

Notable Quotes

• Bridger on Overcoming Youth Barriers:

  "Focus on the deal. If the deal is so good and you can outline every risk and every opportunity... people may look past your youth."
  [02:38]

• Bridger on Fraud Prevention:

  "Do they have third-party audits? Do they do third-party administration?"
  [07:13]

• Bridger on Investment Returns:

  "Tony Robbins… private equity versus the S&P 500 over the last 30 years has 4 or 5 X'ed the returns."
  [05:10]

• Bridger on the U.S. Dollar's Power:

  "The dollar is backed by 14 aircraft carriers. It's backed by a trade embargo."
  [11:58]

• Bridger on Family Values:

  "Your biggest flex you can have in life is an amazing family…"
  [38:09]

Resources Mentioned

• Fundlaunch.com:
  A comprehensive free course for learning about launching and managing investment funds.

  "If you guys want to learn about investment funds, we have a free course on Fundlaunch.com."
  [43:35]

• Altstreet.com:
  Platform featuring interviews with fund managers globally.

  "You can go to Altstreet.com as well."
  [43:35]

Tune in next time to Digital Social Hour for more unfiltered conversations with influential figures shaping the world today.