Brand new long only concentrated equity fund with ~$180million AUM, 2 partners, and I’d be the sole analyst with 2 partners above me (I have 2 years IB + 1 year PE), going to a tier 2 market (Austin/Chicago).
Any idea on expected comp in terms of base, bonus, equity, carry etc, or what I should ask for? Really appreciate this, thank you.
Edit: Aum is actually ~$180 million, not previously stated 42.
Based on the most helpful WSO content, here’s what you should consider:
Base Salary: For a sole analyst role at a new fund with ~$42M AUM, your base salary might be on the lower end compared to larger funds. A reasonable expectation could be in the range of $100K–$150K, given your 2 years in IB and 1 year in PE.
Bonus: Bonuses at smaller funds are often tied to fund performance. You could expect a discretionary bonus of 0–100% of your base salary, depending on how the fund performs.
Carry/Equity: Since this is a small, concentrated fund and you’re the sole analyst, you should negotiate for a share of the carry or equity. Smaller funds often offer carry to incentivize key team members. A carry percentage of 1–2% could be a good starting point to negotiate, with potential for growth as the fund scales.
Other Considerations:
Make sure to have a conversation about expected progression under various return scenarios and clarify how your contributions will be rewarded as the fund grows. Good luck!
Sources: Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role, Large hedge fund analyst compensation, base/bonus 1st year analyst at HF, IB Associate with PE Offer (package question), Interview with Simple As...Hedge Fund Analyst
K
Bump
120, 150-180 is pushing it but viable if you will be immediate value add. get some equity upside. most likely i think it'll end up being 100 + LSD equity
Oof, that’s low as hell
42MM LO dude they’re prob charging cheap fees since they’re LO and new. But even at 2 + 20 in a decent yr where u net 20% they’re only making 2.52m pre expenses where would they find more money to give u…
bro what did you expect from a $40m fund 💀
42mm AUM? 🫥
Bro $42mm isn't a real fund, its grandma's money
I would avoid this job like the plague unless you have a very strong view on their ability to raise SIGNIFICANT (in the billions) AUM.
Even if very good founders?
yes, unless they have insane returns. Like not just sort of beating the market, exceeding it by a wide margin consistently.
The economics of a $42m AUM long only are terrible for one person, let alone 3.
Currently at a first time fund that's bigger... I'd say don't do it unless you REALLY REALLY like the team and think they can raise money quickly.
Save yourself the trouble and DO NOT JOIN THIS FUND. $42mm for an LO is about 90% too low for a viable business.
What if very strong pedigree founder?
Was told comp is 150 base + ~100 bonus. Should I still avoid?
It’s difficult to give you definitive advice without a deeper understanding of your personal financial situation and the specifics of the LO. However, based on the information provided, some concerns emerge.
If you have substantial savings and a high-risk tolerance, joining a new fund could potentially be lucrative. However, the limited information suggests this particular LO may struggle to scale. Many emerging managers with impressive backgrounds successfully secure seed funding of at least $100 million or more from established institutions. One guy who just started his own fund was seeded with $400mm from a well-known bank. Many large LPs have minimum investment thresholds that would preclude them from considering a fund of this size. Meaningful access to institutional LPs typically requires a fund size exceeding $1 billion. They can only be 10% of total AUM and they usually want to write a minimum of a $100mm check. At the $40 million mark, the fund's investor base is likely comprised primarily of family offices, a landscape that has become increasingly competitive and challenging.
If the firm's founder has a proven track record and strong relationships within the family office community, and you have confidence in their ability to scale the fund, the ground-floor opportunity might be worth considering. However, the current fundraising level suggests this may not be the case. Even with a reasonable starting salary, the risk associated with joining this LO seems disproportionately high, given the limited information available.
Thank you for the Chat GPT response intern
I attempted to provide a thoughtful and measured response, highlighting the challenges this $40 million fund faces in terms of scaling. It is going to be nearly impossible for this to work out. If you can personally take the risk and feel this opportunity will set, you up for a better seat in the future that is a reason to consider taking it. Most likely this fund will fail in 1-2 years.
a financial advisor could manage $42m. charge 1% and keep half working at a wirehouse and have 100% equity in their book with room to grow.
the economics of this opportunity are not in your favor.
Your comp at $42mn needs to include some of the economics - thats the only real reason to take this job. You want at least like 10% for the risk of joining this kind of shop imo.
Typically if its this small they do 120-150 base and % on the GP... mostly because there isnt enough AUM to have a discretionary bonus otherwise, and the career risk is high.
The other problem is this is a LO, and well, there isn't a ton of reasons to give money to a LO with $42mn in AUM so scaling will be tough. Also your fees won't be that high, maybe like 1/10 best case right.. especially with early investor breaks.
Listen, they may make it... but the probability this stays in the $50mn-$80mn range forever with no new investor flows is exceptionally high, and without a % on economics and the liklihood of being a dead end, just not worth it.
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