Fee offer for a $14M fund is part retainer, part bonus on reinvested equity
Sponsor runs one closed fund at about $14M of committed equity, 96 LPs, and is drafting a second. He wants to hand off all the investor-facing work: quarterly reports, portal upkeep, onboarding docs for the next vehicle, and the inbox. His offer is $2,800 a month plus a bonus of 0.5% of any equity that existing LPs roll into fund two.
The retainer I can live with. At 96 LPs and 11 quarterly report cycles a year including the annual, I priced my time at roughly 34 hours a month, which puts me around $82 an hour before the onboarding spikes. Thin, workable while I'm building.
The bonus line is where I stopped. Compensation that moves with how much capital comes in starts looking like transaction-based pay, and whether that requires registration is a securities question I'm not qualified to answer, so it goes to securities counsel before I sign anything. Separately, licensing triggers for real estate related service work vary state to state, and I'm mid-application in mine, which is its own reason not to guess.
Even setting the legal side aside, the measurement is a mess. If an LP rolls $250k into fund two, what part of that did IR cause? The sponsor's own relationships did most of it on fund one. I'd be paid on an outcome I influence maybe a third of.
What I'm weighing: counter with a flat retainer that steps up by LP count, say $2,800 to 120 LPs and $3,600 above that, and refuse any variable piece entirely. Or take a fixed annual bonus tied to report timeliness and response-time targets, which I can actually control.
The part I can't decide is whether refusing the variable piece reads as me not backing myself.