One recipe for a successful funds of funds platform is to encourage senior executives of existing firms to leave and form start-ups so you can back them.
That is the message from Glenn Uren, managing director at Franklin Templeton Real Estate Advisors, which has just launched the follow-up vehicle to its debut Asia fund of funds vehicle, the $383 million Franklin Templeton Asia Real Estate Fund I.
“Part of our job is to get people to launch more funds,” Uren said, admitting he and his team were not above trying to encourage senior executives from large established platforms to start their own businesses if it made sense. “Asia has a large and diverse enough real estate market, both in breadth and depth. But in order for us to have long term sustainable returns, we need more funds, more different types, more principals and more different strategies.”
He said backing start-ups was not without risk. “Emerging managers are not for everyone. By their very nature, their team is not set, some pieces may be missing, some of them may need a chief financial officer or a controller-type person and others may need internal legal experience, but in the end you can do well if you find the right ones,” he said.