Founder's Story - The Brutal Truth About Starting a Fund—And Why Most Don’t Make It | Ep 244 with Patrick William Founder of Rixon Capital

Episode Date: August 1, 2025

Patrick William didn't take the safe route. In this episode, the former tech/media M&A banker turned private credit fund founder reveals how he bootstrapped Rixon Capital from a $3M cold-call raise into an internationally respected firm—all without institutional backing. From burning the boats to turning down Plan B, Patrick shares the psychology, risks, and raw reality behind building a fund from scratch. Key Discussion Points: Why starting a fund is like flying a plane with only one engine The real reason raising capital is harder than most people think Management fees, performance fees, and how fund managers actually make money What investors really want (and why they’re happy to pay for boring returns) Why most high-paying careers hold people back from entrepreneurship The “burn the boats” mindset and why it separates real founders from dabblers Capital trends in Southeast Asia—and what excites him most about the region Why patience is the secret weapon behind long-term returns Takeaways: Great ideas aren’t enough—storytelling and persistence close deals Investors aren’t just buying returns—they’re outsourcing stress “Mindless self-belief” is a founder’s most underappreciated asset Sometimes, the only way to win is to make sure there's no way out Closing Thoughts:Patrick William isn’t just building a fund—he’s redefining what smart, disciplined capital looks like in a noisy world. His story is a masterclass in conviction, patience, and making boring look brilliant. Today's Sponsor: Get more leads and grow your business. Go to https://www.pipedrive.com/founders and get started with a 30-day free trial. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

I'm curious on starting a fund. What were some of the challenges that you went through when you were just up and coming and getting this thing going? Yeah, thanks. The biggest challenge and the biggest realization was how difficult it is to raise money. Because you turn up with, the analogy someone used was it's an airplane with two engines.

And we focus on one, which is product. A great product, a great niche, a great story. you forget there's another engine that needs to run which is actually raising money and that's the hardest part when you're starting a brand new fund convincing people the hand over there harder in capital

how did you get that going? I imagine I know I've always wanted to start a fund I know everyone I know is like oh I want to start a fund but it seems very complex because you have one side you need to get money and the other side you need to deploy it

that's right there's two ways of doing it there's the sensible way which is you get a really big family office or a large institutional fund. They'll take 10 to 70, 80% of your business, and they'll help you launch. We did it the hard way. So we've got a group of motivated people together, throw in whatever money we could, shared our Rolodexes.

And then I just started a call call it. So we started with a $3 million raise in October 2022, which really does not pay the bills. but, you know, gradually over time as you build that track record, investors begin to recognize, you know,

the story you're telling actually makes sense because they can see the results. I've always wanted to know how does somebody that has or manages a fund make money? They're two core revenue streams.

So the first, which is the most substantial, is the management fee. So you get a percentage. So we do 1.5% but it can range from 0.5 to a few percent of all the funds under management. So, you know, we had a $100 million fund at 1.5% to $1.5 million a year in revenue.

So that keeps the lights on and ensures everyone's paid. And then there's a performance fee you get for outperforming your hurdle. So the performance fees that's generally 20% of the outperformance, but that outperformance tends to be material. So if we're getting paid a performance fee, we've learned it. What do you look for when you're going to deploy the money? And how does that work? in terms of ensuring that you're obviously doing it to the best places, but knowing there's always some sort of risk when it comes to,

I imagine, putting money into anything. The two aspects to that. So first is your rulebook. We've got, in Australia, we use what you call it information memorandum. So that's what investors get in the rule books tells investors. If you invest in this fund, this fund will do X, Y, and Z. So we're an asset back strategy. So all our loans must be first ranked.

making senior secured, tangible asset back and pay monthly cash interest. So that's our guideline. Then we've got a very senior credit underwriting team. They filter through all the potential borrowers are looking for money. And they use their expertise to filter out people who qualify and people who don't. And then we take it to an independent investment committee. And they basically beat us up over an hour and a half to make sure we've considered all the pros and cons, particularly the cons of a potential borrower. And if we've convinced them, they sign off and then we fund below. If somebody is starting a fund today, I want to start a fund about AI.

If I'm going to start a fund about AI, and I know the fund might be different models than what you're doing, but what are like two or three things I need to ensure that I am really doing my own due diligence in terms of if it's even something right for me to even pursue this? Yeah, as I like to tell investors, let me have the sleepless nights for you, because you're an investor, you're a general manager at Walmart, you're a surgeon, you're an entrepreneur, you've got your lane, you know, you're busy at worth, you've got your own stresses. Do you really want to be running due diligence on 20, 30 investments every week? Or you pay me a 1.5% management piece. A, I do the work. I've got a team that is exceptional at doing this. And number three, the point you just made, you're diversified across 15 to 25 positions. So you're getting all this benefit in return for what is actually a very marginal fee.

So it's a very sensible tradeoff. Thank you for explaining that. This is like a something I've always wanted to learn more, but it's like unless I talk to someone such as yourself, then I don't really know much about the industry. I've never really raised money or raised capital. How do you see just capital raise changing now that, the cost of creation can go way down.

For example, you can build an app, you can build an MVP in three hours using software that cost you $40 versus before, you know, you'd have to raise $30,000 and do just the MVP and I think even costs of acquisition, maybe, you know, maybe it's going up in the sense of there's more touch points, but then it might also be going down because you can just launch a campaign in five seconds and you can use ChatTBTBT to create the copy and the ads and stuff. How are you seeing just this changing the landscape of fundraising? Look, fundraising for a small fund tends to be very personal. So that technology aspect is very helpful. But at the end of the day, investors want to see a face, shake a hand, have a conversation

with someone and build a relationship. So AI, I think at this point helps with the back office stuff, preparing documents, you know, cross-checking data. But when it comes to relationship building, it's still very much the human element has a lot of that. I guess we'll see what happens when they're so human

like in a robotic state, we might not know, you know, who's a human and who's not. I want to hear more about your story. So you were born in Malaysia. Obviously, you're now in Australia. What was the journey like?

So I went to university, I moved from Malaysia to Australia to go to university, and then I was hired by the Australian Investment Bank, Macquarie Capital, to work in their mergers and acquisitions team in Singapore. So I did South East Asia coverage in the tech media and telco space for three years. Towards the end of that time, they sent me back to Sydney to work in at HQ. And, you know, the short story, I never left. I met my wife here, and she didn't like the weather in Malaysia, so Australia was going to be my new home.

So I worked in MNA for another 10 to 12 years. The MNA shop I worked for towards the tail end set up a funds management business. And that's when I made the trade. The cultural differences and it's also the taxation system. So in Asia, for instance, in a lot of Asia, there is no tax on capital gains. So people love the equity markets. They love capital growth because it's effectively tax-free. Whereas in Australia, there is a substantial tax.

an income fund versus the capital fund competes on a different level. What are you excited about when it comes to, let's say, Asia-Pacific, Southeast Asia. I don't know if you're still following up with like what's happening in Malaysia, but everyone I know in Southeast Asia, for example, there's so much entrepreneurial excitement. It's insane. And I always enjoy obviously going to the neighbor in Singapore, always so many events about business and such. But is there anything that excites you?

or anything that you're looking at, maybe for either Asia, Pacific, or Southeast Asia. Yeah, specific child fund. One of the biggest game changers I've seen for founders isn't another pitch deck, another tool, or even another investor. It's how you manage sales. And I'll be real, when we first started, we were getting leads, we were getting business, but the pipeline was so messy. Leads were falling through the cracks. We weren't following up.

We were losing tons of revenue and money and everything was all over the place. It was chaos. That's when we started using Pipe Drive, today's sponsor, and the number one CRM for small and medium businesses. But the thing I love most, Pipe Drive AI, it actually helps you work smarter, not harder. It gives you real-time deal recommendations, writes your emails with one-click prompts, and even summarizes entire email threads in seconds for us that met no more guessing who to follow up with or what we said last week. We focused on closing great clients and more deals. If you're a founder or creator trying to scale your sales, you need this.

Over 100,000 companies are already using it and you can try it right now. Go to pipe drive.com slash founders for a 30-day free trial. No credit card, no commitment. Just head to pipe drive.com slash founders and see why I trust it every day to grow my business. It's definitely to raise capital from there because the target market out of Asia, as people have done really, really well in these entrepreneurial ventures, there's a lot of money in that market. And effectively tell people, look, I know you can make, you know, a 30% return,

all these little investments you've got in various sectors, but there's always a sport in your portfolio for something boring, safe, and income generating. And that's where you should come. What's the allocation that people typically do when it comes to like this, what you're saying is like the more, the boring, maybe more steady, and then you have obviously different risk levels. But what do you normally see people do? for the percentage of their portfolio?

Good question on percentage. I think it comes to where you are in your life cycle. So if you're closer retirement, we'd get close to 50 to 75% of someone's portfolio because it's an asset back strategy and they're using us for income. But if it's a younger person, they tend to use us just for that income.

It pays for the cost of the troughs or private school fees. So the median investment is half a million dollars. So they'll generate five to $6,000. or monthly income without fun. So some investors say, as you said, pays for private school fees, we've got one investment in the Gold Coast who says

it pays for her Maserati lease. I mean, if you can get a free Maserati, not free, but if you can get a Maserati paid for, I mean, that's better than paying for the Maserati, right? That is quite fascinating. I mean, I know there's other returns that I've heard people say, you know, five to 10% of something, like you get to a certain age,

and you just want to continue with something steady and lower your risk factors when it comes to the majority. But when you look at just entrepreneurialism or entrepreneurial spirits of people, what do you, when you think of what makes a great successful CEO, what is one trait that either has been there for you, been there for people that you've known, partners, however you want to spin it, But what is one trait that you find, like, okay, every successful entrepreneur has this one trait? Mindless self belief. If you believe in yourself and you believe in what you're going to do and you stick with it,

and that's what that belief allows you to stick with it, you'll come good by and large. You know, our example is, you know, we thought we'd start with tons of investor funds coming in and, you know, tons of $3 million. But I knew it was a great product. I knew that what we were doing was different. special and we just stuck with our guns and uh said with time people recognize what you do and you will come good i think we're all impatient i was just talking to my wife about how we just launched this software like two weeks ago and i'm like you know what i normally i would just give up

patrick i'm like forget it's not moving fast enough shiny object syndrome right like i have no patience but you know you just said it before you start in the beginning it wasn't huge but you knew that eventually you would get there. How do you continue with that patience, knowing that it is, you know, and not an overnight success? There's a quote, but I think it's, I think it's Ferdinand Cortez, the conquistador who turned up to South America. They landed and they're a choice. You know, we could chicken out. We can get cold feed and go back to Europe or we could go into this unexplored jungle and all the risks that comes with it. And his famous words were burn the boats. And if you'd burn the boats, and there was no plan B. And that's

exactly how we built the fund. There was no plan B. So it was going to succeed or is going to succeed. And that allows you to have laser focus. So you might have a bad month. You might have a bad quarter. But if you haven't got a plan B, you'll stick with it. And surprise, surprise, if it is a good idea, it will work. No, I'm glad you say that. I think a lot of the most successful people that we've had chances to talk to what would have said the same thing it was all or nothing that was it there was no plan b c d e f either this made it or it didn't make it and then they lost everything do you find this to be almost like the reason why most people probably would not make it as an entrepreneur not that they can't do it but the the reason why they wouldn't continue

and make it is because most people don't have that ability to say, this is it. I'm going all in. It's one thing when you work for a job and you know you'll get paid and maybe at some point you get fired. But your business, you may never get a paycheck. You may never make any money yet you're going to put out all of this, this work and energy. How do you feel about that in terms of do you think this is a reason why maybe a lot of people don't get, don't try and be an entrepreneur? Yeah, I think you're bang on on that. The biggest challenge is, and so I've come from financial services, and the worst part about the career in finances,

it pays too well for very little risk. So why would some investment banker give up his job when, you know, he's got a good income and he's looking after his family. I think that was Jeff Businesses story. He was an investment banker, and his boss told, why not he's doing this? You know, he got this great job. You got a big bonus that turned up every year.

And he said, yeah, I've got bigger dreams. far out he's done all right he'd probably have a much smaller yacht if he continued that's what i'm guessing you know um definitely wouldn't his wedding would have been much smaller i'm sure uh Patrick no this this has been great appreciate your time if you want to get in touch with you they want to find out more information about the fund everything that you're doing how can they do so uh our webpage is a great starting point so it rixen r ixon dot capital that's it no dot com not no dot a u uh log on there all our details available. I'm the founder and managing Gratian and portfolio manager. I speak to all investors, $30,000 or $11 million

investment. I'm the guy you speak to it. I'm the guy who'll answer your question. So it's very personalized between. Well, Patrick, this has been great. Rick's in Capital. You have what I would say, rated number one mustache of 2025. You can add that ward to your website, by the way, in case people can't see you. I know it's part of your your signature look. We talked about this earlier. I like that.

I've been thinking about that since we talked and have, you really need to have some sort of separation between you and everyone else in the world. Like the look that whether you dress a certain way, I was talking to someone recently. They're like, I dress in these type of clothes because when I go to an event, I stand out. And so I enjoyed what you said.

I just can't grow a mustache. It's just not really hot. But I really enjoyed the conversation, learned a lot, and thank you for joining us today on Founder's Story. Thanks so much for your time, Daniel.