Interview

“Funds aren’t just about making a few people rich; they contribute significantly to economic activity and can drive substantial progress in various sectors.”

Q: Let’s dive right in. Could you provide a brief overview of your background and the nature of your current professional pursuits?

Bridger Pennington: I live in Salt Lake City, Utah, born and raised here. The gist of what I do is I assist people in launching investment funds, and I also manage two investment funds myself. A fund is essentially a pool of money where investors contribute, and we utilize that pool to acquire businesses, real estate, crypto, or other assets. When these assets generate profits, the returns flow back to the pool and are distributed between the investors and the fund manager. I’ve previously managed two debt funds, wherein we issued loans and achieved significant success. We even sold one of the companies to a competitor, resulting in a successful exit.

Currently, I oversee a hedge fund focused on cryptocurrency, where we pool money to invest in various digital assets. Additionally, I manage a fund that acquires stakes in other funds. Our hedge fund manages $25 million, and we’re currently raising $50 million for our GP stakes fund. Furthermore, I provide training to others on this process, and our community has grown to 70,000 individuals who have taken our courses. Over the past two years, we’ve launched 210 funds within our community, with approximately 70 of them surpassing $10 million. It’s been a rewarding journey, especially considering my family background in funds – my dad co-founded a deca-billion dollar family of real estate funds, and my brother is an investment funds attorney. So, we’ve kind of built upon this familial foundation to create content and facilitate these endeavors.

BA Pro Tip from Bridger

Q: Based on your extensive experience, what do you think is the most common misconception about your work?

Bridger Pennington: The biggest misconception is that you need decades of experience on Wall Street to start a fund. However, many of the most successful fund managers, like Warren Buffett, Ken Griffin, and Ray Dalio, didn’t follow that traditional path. For example, Buffett started his first fund at 25 with just $105,000. He began with small private equity deals and grew from there. Ken Griffin began trading at 19 and started his first fund a year later with about a quarter million dollars. By the time he was 30, he was managing a billion dollars. Today, his fund manages around $80 billion. Dalio also started young, getting into the game at 26. These examples show that it’s not about waiting for a perfect set of circumstances. Success comes from jumping in, performing well, being honest, and building integrity. Over time, this attracts more capital and leads to significant growth.

Also, it’s worth noting how pervasive and influential funds are in the global economy. For instance, a growing number of homes in the U.S. are purchased by investment funds—now about one in three. Major parts of cities like the Las Vegas Strip are owned by just a few funds. Even large companies like Volkswagen, which owns several other major car brands, are essentially part of one big funded entity. And when you look at the influence of the biggest players like BlackRock, Vanguard, and State Street, they control a substantial portion of the S&P 500. This control extends to pushing significant initiatives like ESG (Environmental, Social, and Governance standards), which can dictate corporate behaviors across the Fortune 500. It’s fascinating and somewhat concerning how much power these funds wield.

But as much as this might seem daunting, it underscores why we need more understanding and participation in the investment fund sector. Instead of a few funds dominating, I believe in a vibrant, competitive fund market where many entities, big and small, contribute to a dynamic economy. This competition is the essence of capitalism, and it’s what I support. I think it’s crucial for more people to grasp and engage in this area, breaking the hold that just a few have over so much.

BA Pro Tip from Bridger

Q: Capital funds often have a negative image among the general public, almost demonized. How do you address these perceptions and highlight the positive aspects of capital funds?

Bridger Pennington: You’re right, there’s a common misconception about funds being merely profit-driven or even harmful. However, it’s important to recognize that funds are a major driver of wealth and progress. The Forbes 100 list, for instance, is heavily populated with fund managers. This isn’t just about the wealthy elite like Elon Musk or Jeff Bezos, whose fortunes fluctuate with stock prices. It’s about consistent, substantial income generation.

Take Ken Griffin of Citadel as an example. Last year, he earned $4.3 billion from managing his fund—not from personal investments or fluctuations in net worth, but from actual business operations. That breaks down to about a billion dollars a quarter, or $300 million a month. The ability of funds to generate such income consistently is what makes them so powerful and influential.

Funds aren’t just about making a few people rich; they contribute significantly to economic activity and can drive substantial progress in various sectors. This is the angle I try to emphasize when discussing the benefits of capital funds. They are powerful tools for growth and development, not just vehicles for accumulating wealth.

Q: With 70,000 individuals having participated in your training, clearly, they won’t all become the next Ray Dalio. How do you help them set realistic goals that positively impact their families? What benchmarks do you recommend for achieving clear and attainable goals?

Bridger Pennington: Starting a fund isn’t for everyone, but learning about funds is beneficial across the board. It’s crucial to understand the fundamentals, whether you’re looking to manage a fund or simply invest in one. For example, I’ve invested in several funds, like real estate, where I’m not an expert. This allows me to benefit from the expertise of those who manage everything from tenant issues to maintenance, while I just collect returns. Understanding the operations and fees of these funds is essential to ensure you’re making informed investment decisions.

For those interested in starting their fund, I recommend two approaches: either expand a successful existing business or capitalize on a solid investment opportunity. For instance, if you own a thriving business, you could use a fund to acquire competitors and expand nationally or internationally, which significantly increases your business’s value. Alternatively, if you’re skilled in an investment area like real estate flipping, starting a fund can scale your operations dramatically. We helped one of our members raise $5 million to flip 72 homes in a year, greatly enhancing his efficiency and profitability.

The key is to understand how a fund can strategically benefit and grow your business or investment venture. This approach not only helps set realistic goals but also provides a framework for significant expansion and success.

Q: In the FAQs section of your business, what are the most common questions you encounter, and which ones do you find important to address to reassure or clarify matters for people? Can you share the top three FAQs that consistently arise?

Bridger Pennington: Certainly. One of the most frequent inquiries we receive is whether a license is required for this endeavor. The answer to this question is nuanced, as it depends on various factors. In many cases, operating as an exempt reporting advisor (ERA) can exempt you from needing a license in many states and jurisdictions. However, it’s crucial to assess each situation individually.

Another common question we encounter pertains to the activities a fund can engage in. Individuals often inquire about investing in diverse assets like real estate, cryptocurrencies, or even venturing into projects like resort development. The beauty of fund management lies in its flexibility. Through carefully drafted operating documents, commonly referred to as the “bible,” funds have the autonomy to pursue various ventures. Nonetheless, it’s important to consider whether such diverse activities align with the fund’s objectives and the preferences of potential investors. While permissible, managing a diverse portfolio may pose challenges in attracting investors.

Q: You’ve shared some intriguing anecdotes, especially regarding your family’s involvement in the business. Reflecting on this familial dynamic, and considering your relatively young age, what advice would you offer, drawing from your experiences thus far? Are there any lessons or guidance you wish you had received earlier, beyond what your family’s business lineage provided?

Bridger Pennington: Absolutely. Let me share a bit of my journey. Growing up, I had no inkling that my dad had amassed significant wealth. We led a comfortable yet modest life, seemingly average. It wasn’t until college that I stumbled upon the revelation that my dad oversaw an $8 billion family of real estate funds, a realization that astounded me, given our modest lifestyle. Despite our relative affluence, my dad instilled in me the importance of prudent financial management, opting to invest and save rather than indulge in lavish spending, a lesson I carry with me to this day.

Every Sunday night, my dad would delve into the intricacies of fund structuring, sketching out diagrams on a whiteboard to impart his knowledge. This early exposure laid the foundation for my eventual foray into fund management. While still in college, I conceived the idea of establishing a fund at my workplace, aiming to provide financial solutions while turning a profit. With my dad’s enthusiastic support, we meticulously crafted the blueprint for the fund, despite my tender age of 22.

When it came time to secure investors, I turned to my dad for funding, only to receive an unexpected response. He declined, citing the importance of my autonomy and the need to navigate the fundraising process independently. Although disheartened initially, this refusal propelled me to muster the determination to seek investors elsewhere. Through perseverance and resourcefulness, I secured modest funding from a handful of investors, launching a micro syndication fund that yielded an impressive 64% return.

Buoyed by this initial success, I embarked on subsequent ventures, culminating in the establishment of my own hedge fund, with assets under management totaling $25 million. Throughout this journey, my dad served as an invaluable mentor, offering guidance and wisdom rather than financial backing. His unwavering support and belief in my abilities empowered me to navigate the intricacies of the business landscape with confidence.

In hindsight, I recognize the profound impact of my dad’s mentorship, far surpassing any monetary contribution. His emphasis on self-reliance and perseverance has been instrumental in shaping my entrepreneurial journey. While financial assistance can undoubtedly facilitate growth, the intangible gifts of knowledge, wisdom, and time are invaluable beyond measure.

Now approaching my 29th year, with six to seven years of experience in the field, I stand independently wealthy, having recently achieved $30 million in revenue for my business. My confidence stems not from inherited wealth, but from the invaluable lessons imparted by my dad. His approach, prioritizing guidance over financial support, has been a true blessing, fostering a sense of fulfillment and accomplishment unmatched by mere monetary gains.

Q: As you reflect on your journey and achievements thus far, where do you envision yourself, as well as your business in five years? What are your projections for your personal and professional growth over this timeframe?

Bridger Pennington: Firstly, I envision myself having a beautiful family, with two to three kids, and nurturing an incredible family life. Being a great dad and family man is my top priority. While we already have a great family, I aim to enhance and build upon that foundation.

Secondly, from a business standpoint, I understand the importance of playing the long game. I try to think in terms of 20 or 30-year timelines. My goal is to excel with my current investors in my fund, which currently manages $25 million. Even if I don’t personally profit from it, the compounding effects could be monumental. It sets a trajectory where consistent progress can lead to remarkable growth. In more concrete terms, I aspire to oversee a billion-dollar fund, and eventually, a ten-billion-dollar fund as we expand. The timeframe for these milestones may vary, but my approach is to view this journey as a long-term commitment, navigating through multiple market cycles and leveraging the power of compounding.

In terms of my career trajectory, I’m off to a solid start. My aim is to remain cautiously leveraged and avoid the pitfalls of entrepreneurial overextension. I seek to maintain steady growth and compound my successes over time. Reflecting on luminaries like Ray Dalio and Warren Buffett, who have achieved incredible wealth through decades of consistent investment, I’m inspired by their paths. Warren Buffett, for instance, has been compounding for 63 years, starting small and steadily building his empire. Similarly, Ray Dalio has navigated the markets for 39 years, demonstrating the power of long-term commitment. I see myself on a similar trajectory, aspiring to achieve comparable success over the course of my career. I hope that clarifies my perspective without coming across as boastful. It’s simply the path and progression I aspire to follow.

Q: Your future endeavors seem to have a clear trajectory, perhaps making detailed planning unnecessary. However, focusing on your philanthropic efforts within a sizable community of 70,000 individuals, what inspires and drives you? Despite potential distractions, there’s a deeper motivation guiding your actions. Could you share the goals and motivations behind your commitment to giving back?

Bridger Pennington: Absolutely, there are two fundamental aspects to it. Firstly, I’m deeply committed to democratizing Wall Street. Our mission is centered on this goal. We aim to break down complex financial concepts and make them accessible to everyone. This mission is fueled by the concern that without widespread understanding and participation, we risk being controlled by a handful of large funds, dictating the course of the global economy. Our recent event, attended by 1500 individuals, underscored the direct impact of their fund’s actions on people’s lives, including mine. By encouraging engagement in various markets and diversifying investment strategies, we strive to prevent the consolidation of power into the hands of a select few, thus averting the dominance of a renter economy.

Secondly, I acknowledge the privilege of being raised in a family where financial knowledge was abundant. My father, despite lacking a traditional Wall Street background or Ivy League education, successfully managed tens of billions of dollars and amassed considerable wealth through entrepreneurship. Recognizing this advantage, I feel compelled to share this wealth of knowledge with others. My father frequently speaks at our events, offering invaluable insights and experiences. We also provide mentorship opportunities to impart the message that with access to the right information and determination, anyone can emulate our success in launching funds. My motivation stems from a desire to level the playing field and empower individuals to pursue financial independence and success.

BA Pro Tip from Bridger

Q: Do you have access to prominent figures like Ray Dalio or others in similar positions? Have there been any interactions between you and these influential individuals? Furthermore, what is their perception of your work and mission?

Bridger Pennington: Yes, we’ve made significant strides in connecting with influential figures. I had the opportunity to meet Ray Dalio about six months ago, albeit briefly. During our brief conversation, I outlined our endeavors, and he expressed genuine interest and admiration for our work. He shared a similar mission of educating and empowering individuals in finance and investing, emphasizing the importance of broadening access to financial knowledge. Additionally, we’ve had notable speakers like Jim Rogers at our events, who commended our innovative approach to changing perceptions of funds and finance. Despite our growing impact, there are individuals in traditional Wall Street circles who resist our approach, advocating for a more conventional path typically associated with prestigious institutions. However, we remain steadfast in challenging these norms and continue to push boundaries in our quest to democratize finance.