Starting a Hedge Fund?
It’s not the best time to start, my friends and I are all mid to late 20s but I think we have the base backgrounds to get something going…the risk is leaving our roles to do it but I feel like at this time with no mortgages no family and solid enough background it makes sense to try.
That being said, does anyone here have experience or know anyone who has done this. Nothing crazy think 10-50m small shop goal of 100m and to stay around there while we build out strategy. What would we need to look out for and most importantly why shouldn’t we do this?
For background me: 6 years IR, Fundraising and institutional sales.
Friend 1: 5 years equity research bb sell side
Friend 2: 5 years Global Macro Trader respected 500m hedge fund
Friend 3 maybe: 6 years Investment banking.
I know things like this have been done before but can anyone speak on if this is doable and if they have done something like this before?
I mean this squad looks weak asf unless the macro guy is a killer and y’all want to do a macro fund (insanely hard btw). Everyone else seems to have 0 investing experience which is not great unless you all are natural born investors.
95%+ chance you all (yes, all) will make multiples more money sticking in your current seats than doing this.
So no one has any investing experience? Is the trader an execution trader or closer to a PM?
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Let's put tgt the Avengers where no one has fought before
Thanks guys I forgot to mention it’s not going to be global macro focused but my buddy that would be part of idea generation worked across multiple asset classes and markets in global macro. I would say the theme would be actively managed but also involving our specialities. Think a combination of diversified etfs mixed with managed futures and liquid alternatives not named gold.
The trader…He’s a senior trader but also with 3 years of being jr pm (let him play with a book monitored by his pm but they most likely will not promote him and do not give him full pm pay on those returns) from 2020 to now and took losses of around .51% on his book 2021 and then up 24% 2022 and currently around 18.5% ytd. He’s probably one of the better futures traders in his age bracket. I guess he rose pretty fast from trading assistant to trader to pm. I would consider him a top dawg and he would be our “non master” chef.
Myself I’ve raised over 400m for lps across hedge funds and ge funds, brokered 300m lp secondary stakes and pre ipo secondary direct equity individually and have transacted on a team for 5B in sales across public and private markets. So I do have a network to tap into and success albeit with more established deals and names.
Equity research buddy is specialized in tech stocks (public and private companies) and war stocks. He spent 2 years before that as a 150m hedge fund analyst and went sell side for better pay. He’s also an absolute nerd that would rather read competitor reports and legal agreements for cdos for discrepancies in the bond market pricing for fun lol.
Banker buddy is ECM and very organized and well rounded but would probably be risking the most doing this.
Have not decided a theme so the avengers of shitty group comment made my dad ahaha.
Still low end in experience but there’s a track record. This would be a pay cut for all of us no doubt but the goal is to build something and be autonomous. Id still be able to continue outside fundraising activities for 1099 at other bds and funds but also continue extended my relationships. Appreciate more feedback cause for now we will be thinking of ourselves as the clown avengers.
I have not much to add except that from my time in manager research, this is not a typical team sheet.
It strikes me as very odd that in spite of your 5+YOE fundraising, you seem to think this is achievable, which is making me question my belief that this sounds ridiculous. In your time in the fundraising space, have you ever seen or heard of a team like this actually being successful?
It just sounds like only one person on the team is trading stuff that they've ever looked at while the rest are just going to learn as they go? Am I wrong?
Frankly, absolutely not. PMs and teams who leave established AMs to run their own fund battle for institutional flows, this team has zero track record. Not to mention the poor economics of running a sub-scale fund.
Anyone has experience starting a hedge fund? | Wall Street Oasis
Zero chance.
Find a law firm with finance experience and follow their counsel to launch an incubated fund.
I could make a long post but this the the general way.
Sorry someone had to say it: what about a lemonade stand?
Terrible idea. It's very hard for even established investors with track records to raise money. All of you are still pretty junior, would probably all benefit from more experience of being actual decision makers
This has to be a troll post… it’s scary to think all of you thought this was a potentially decent idea…
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