Jeff Schwartz

Recruiting and retention is definitely a challenge without the management fee base that some of the mega funds have.

It's difficult to retain top talent and to recruit and retain top talent and compensate them appropriately.

We try to create a more entrepreneurial experience in the long term, the ability to work across different products.

Private credit, private equity, and special situations helps young junior investors hone their skills and develop flexible investing capabilities.

And we align their incentives.

So even at a very junior level, all of our investment professionals receive, promote in all of the different funds.

So we try to convince them that if we do a good job investing our capital, albeit at a smaller base, and we generate meaningful profit dollars for our investors and promote dollars for ourselves, you are a participant in that early on.

So while their base salary might not be comparable to where the mega funds pay people, they will get carried interest and other incentives that can create long-term wealth for them.

So our first fund was an unlevered non-SBIC fund.

But we recognized early on that the SBIC program was a really, really attractive one for emerging managers.

And the way the SBIC program works, and it's been around for decades,

almost 100 years at this point, the Small Business Administration started a program called the Small Business Investment Company Program, where the government provides attractively priced leverage under attractive terms to investment firms that they vet very thoroughly to invest and stimulate investment in small businesses.

And what that attractively priced leverage effectively does for managers of these funds and for investors in these funds is it enhances the return profile.

So our first SBIC fund was a 2017 vintage fund.

It was a $350 million fund with $175 million of private capital and $175 million of very, very low cost fixed rate debentures.

The interest rate environment at the time was different than it was now.

So the average borrowing cost was

was probably sub 2% on that fund.

And as a result, that fund was able to generate mid-20s returns on both a gross and net basis.

So all of the fees and expenses associated with managing and running a private equity firm and paying promote to the GP was more than...