In what industry is it easiest to start a fund? Ideally I would one day like to start a top tier VC fund, is that possible? Because one day I want to start my own fund and work for myself, would it make more sense to go into PE or HF?
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Prob hard to start a large ($1+ billion) HF unless you are experienced/old in the industry. Need to be least 25+ years old w 4-5 years of experience and even some people that are old/experienced (im thinking late 20s w/5+ years at Goldman or citadel) have a tough time starting their own big fund
Nobody less than 35y with less than 10yrs of experience being the best analyst or PM or trader in a top 1% fund (10-ish funds in this bucket) launch with $1B.
Lol right, I was like what have I been missing... what 25yr old kid started a 1bn fund recently?
Using $100mn baseline launch AUM, it's def easier to launch VC funds. Easier to demonstrate an edge to investors (niche expertise, contacts, etc.) even if you're a plain vanilla 26yr old VP at a big VC fund. Raising $100mn for LS or LO HF as a young guy you either need at least 5y of strong alpha or be backed by 1 or 2 billionaires who happen to like you.
I would say a listed securities HF would easiest to start relatively speaking, as the initial setup and running costs are low compared to PE or VC and fund raising is relatively easier.
Also listed securities are liquid and easier to access through prime brokers, it's an open for all compared to PE or VC where you have to source deals which don't come by as easily and do a lot more due diligence with less cleaner or more limited data to study especially with startups, startups want a name brand VC to fund them which would make it relatively easier for them to get funded by other big VC's in the future due to the credibility that comes from being funded by a well know VC.
I have helped ex-traders and managers create their own incubator fund structure, LLC's, GP, LP and the likes. Had helped a non-western client start an incubator fund so that they could build a track record trading equities and then gradually move towards raising funds from investors.
Starting an incubator doesn't require any approvals from the state securities regulator, SEC or FINRA, but once you move towards outside investors it's a much difference regulatory landscape and also the running costs can be quite high due to number of service providers like administrators, accountants and securities attorneys etc. that need to engaged to run a fund in full compliance, LP's especially institutional and big family offices want to see name brand accountants and auditors to establish credibility which again comes at a price.
It could be a worth while pursuit for you to try starting an incubator fund with a couple of $10k's and see where it goes and it would give a chance to engage with service providers and help you learn the ropes and it would also be required to have a fix trading strategy that you need to follow at all times, which is preferably backtested.
Happy to answer more questions.
Could you go more in depth about the details and possible uses of an incubator fund?
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