What is the new - "lets start a hedge fund?"
I'm so embarrassed I am even posting this, so I am doing it anonymously... Somewhat inspired by the recent "we want to start a hedge fund" post. In the past I usually jumped at the opportunity to explain why its a bad idea, and just how ludicrous the posters sounded, but it seems like you guys covered it pretty well again.
In the olden days - the good ole days perhaps - before anyone even realized it was the good ole days, and as a cottage industry, it was somewhat more accessible for someone to hang their shingle and launch any kind of fund doing whatever they wanted. We all recognize why those days are much past us - the entire alts industry has really institutionalized itself, it is ever more competitive, information + data are widely disseminated, and it takes a TON to have any a real value prop to would be LPs these days. Scale + pedigree + true alpha (which is tough). Even the "former tiger cub senior analyst launching with $500mn" is struggling to prove why they deserve to be in business (although I wouldn't GAF honestly, lemme clip single digit millions a couple years, sounds sweet). There are quite a few under the radar / non-pedigree tracked guys who still crush it here ($500mn-$2bn AUM) and I think we forget about them too often, but they are the exception rather than the rule for sure.
Anyways... What is the next decade's equivalent of "lets start a hedge fund". I've had this boutique RIA "idea" for a while, but it is not that novel or original. But Is there anything left in the finance world that is not as significantly institutionalized? Is it the search fund? Super lower middle market PE? Rolling up your local HVAC businesses? Maybe everyone here is way more successful than I, and has a good track left in their analyst to PM path for as long as they can, but its clear that I am not going to be clipping meaningful $$$ on my current path, and will need to be a bit more entrepreneurial. I fear I no longer see many "places" for that in the finance sector (when my only skills are looking at stocks and selling myself/pitches).
Search funds are a joke now. Way toooo many. Total joke space.
Probably a crypto or ai venture.
I've always thought it's an interesting model, and it's a shame that it has become a joke. Will be interesting to see how it performs through the downturn. I think the SBA has created artificially low barriers to entry by allowing what seems like anyone to do a small search fund deal by getting 90% LTV leverage through the SBA. So now there are a bunch of people that shouldn't be in the space, yet are, because they never really needed any third-party investor validation to finance their deals.
I would like to potentially do a search fund deal one day, but definitely going to wait until more of these jokers get flushed out of the space.
what is a search fund?
basically funds that fund """entrepenurs""" with the goal of them taking over small companies and growing them
I couldn't disagree more with this.
Both VC / crypto / AI have and likely will prove to be commodities. The speed to which talent and capital flock to these sorts of ventures has completely distorted where the "gold" is in terms of identifying high ROI careers/sectors. The faster people recognize something is viable, the quicker that ROI erodes.
It took forever for finance to become more institutionalized and frankly only occurred as a result of the GFC. The OG hedge fund industry as we know it was entirely changed as a result of Reg FD and position reporting amongst a laundry list of other regulations. Crypto's days in the sun lasted what, 2 years tops before the incumbent scaled player is now on trial for fraud? It diminishes the credibility structurally and either deters top talent making it difficult to grow or defers institutional capital who can't afford to take a risk like SBF again. AI is another story but with the influx of capital these industries get commoditized so quickly that the returns go by the way-side quicker and quicker. Also we're probably at peak AI growth anyways.
I still side on the "find a skill you are GOOD at" or have an edge in and maximize your talent there, the best % performing [insert any job here] will be in the best company/industry.
My bet is on trades / trade schools - best ROI from industry perspective is going to be labor services.. think plumbing / electrical / auto collision repair.
Know it's ex-finance but if I had to pick within finance it'd be too difficult. The $ flows quickly until it stops and that duration spectrum seems to shrink for every new attractive industry that pops up.
delete
Imma start a new lithium mine, that's where it is at
A lithium mine is better than all the other garbage though
Yah, but can you help? Need some intro to African dictators to secure mining rights. Thanks.
Following, going to MMHF soon and with the high wash-out rates I truly don't know what to do if I lose my job before I even build up proper savings.
I feel like the most common is always going to be the consumer tech/cpg startup given the lowest barrier to entry
Starting the 100000th organic, non-gmo, health beverage or the 10000000th travel app that's supposedly differentiated but is exactly the same as the 1000s of other apps
How is rolling up a bunch of hvac companies more lucrative than running a $500 million hedge fund?
less competitive, easier to improve a poorly run business than to beat the markets
Not to do with finance but it's probably going to be to do with creator economy. E.g. starting a social media agency (ghostwriting, copywriting, creating courses/communities etc). There are some people making silly money off this with very little value add and making more money teaching more people how to add even less value.
sometimes i think about if instead of emails and pitches to my PM i quit and started making youtubes and tiktoks about my investment research. could i pull in more $? imagine doing that and inadvertently building an awesome track record with your calls and the next generation of LPs follows your content and then gives you capital eventually.
There is frankly no need to even be that sophisticated. The level of financial knowledge of the general public is far worse than even your worst assumptions. And given tiktok/YT is skewed to younger people, it's even worse than that. Frankly if you start talking about complicated stock calls or theses, you make your audience significantly smaller than say if you explain what a dividend yield is and amaze people with the concept of compound interest. This is obviously fairly commoditzed information - but a lot of info on tiktok/YT is exactly that, so it's more about difference in execution usually. I mean like, the bar to entry seems very low. Have a read of this article: https://www.theverge.com/22807858/tiktok-influencer-microsoft-excel-ins…;
On the other hand, substack newsletters for what you're describing (although kind of a dime a dozen now) have enabled a lot of people to quit their buyside jobs.
Recent research by the Swiss Finance Institute: 28% of finfluencers provide valuable investment advice that leads to monthly abnormal returns of 2.6% on average, while 16% of them are unskilled. The majority of finfluencers, 56%, are antiskilled, and following their investment advice yields monthly abnormal returns of -2.3%. Surprisingly, unskilled and antiskilled finfluencers have more followers, more activity, and more influence on retail trading than skilled finfluencers.
OP here - funnily enough, my "favorite" new venture idea that I came up with is for the "creator economy". Like all ideas, execution is incredibly hard (but probably harder than "here is my new eco friendly soap with a good marketing push"). Without getting too specific (gosh I sound like an idiot - should I make you sign NDAs?), it is a marketplace concept, and with zero credibility, connections, or software design skills, it'll be a much tougher road than just reaching out to some white label manufacturers for my shark tank like creation, and slowly pushing it into DTC, AMZN, etc.
If anyone here wants to shoot the shit about this idea - let me know? This is how all great businesses start right?
Something I see on my ig feed recently is that Karat card (biz banking for influencers?), there's like a gazillion fintech banking apps, super saturated, yet I guess they stand out because they cater toward the creator economy since most of them have no real jobs (no pay stubs, little credit, etc). raised 26m series a, 70m series b.
of course oversimplifying it, but there do seem like a shit ton of ventures that would otherwise be a dime a dozen, yet stand out since they focus on a specific niche
I’d be curious to hear more, especially how you’d overcome cold start w a marketplace model.
Think this idea sounds perfect, I am interested in discussing.
For certain (i.e. tech) people, it'd probably be "let's create a new cryptocurrency"
Online book stores is a good idea. Also, as I have concerns with the impact of fossil fuels on the environment, as a whole, perhaps automobiles and other transportation vehicles that don't run on oil products would be a nifty business.
The point of the post is easy businesses 😭
How tf do you people not see he is talking about AMZN and TSLA lol
Ah yes, the historically low barriers to entry automobile industry.
Let's do nothing?
Let's grind it out making 300k-400k if we are lucky (except for the truly exceptional of us on here, or maybe I am delusional and all of you here clip +600k consistently?), lose most of our money to HCOL areas, and struggle to settle down for an affordable house. Maybe I am just being too cynical and hard on myself today
I'm OP from the other thread (L/S analyst feeling stuck) and honestly hoped you'd get better responses here as it's a question I think about a lot too as someone stuck in that $300-400k range.
My approach so far has been to try and figure out what I can do to change it, and aside from "I just need to get better" I can't think of anything else. I don't think changing industries is the way to go, that's a whole other shit show, starting your own thing. Feels like we are in the right type of seat, on the cusp of figuring it out, just need to push through somehow.
300k-400k seems a very reasonable number to settle.
probably something related to deconstructing some of the bullshit that appeared in the last 10 years
Was thinking about this the other day, not really sure what it is.
PE and HF were both once seen as wild and distasteful and dumb.
What is the equivalent today?
Maybe crypto but not really sure how viable it even is…
Wait that’s how PE and HFs were once viewed? What period of time was this and when did that change?
It's simple: 1. Build a start-up (industry doesn't matter, they all succeed) 2. Exit for $500m - $2b 3. Raise a Venture fund with a thesis based on finding founders who have done dangerous voyages (I backpacked from the Gaza Strip to the Dead Sea)
hop on the carnivore diet / anti microplatics + seed oil trend and start a D2C raw milk delivery service or something
The fearmongers of this industry propelled it into success. They are happy with the cash that is rolling in and could care less, but now I have to look at people walking around with $20 shit smoothies who believe anything that is not labeled organic will cause them to have an instant onset of cancer and death.
Some kind of search fund / roll up targeting the $30T baby-boomer wealth transfer? Maybe automated / data-driven sourcing? The guy who did this in Japan is a billionaire (https://masouken.com/en) Would love to game something out....
Interested in this boutique RIA idea as well
if you talk to any HVAC small business owner or something they get like dozens of inbounds from 26 year old MBAs at top 15 schools asking to buy their business lol. says its insane
So you want to make money? Do you feel like you are about to fly straight into a ceiling? Well, your problems are now gone. I have a solution. Simply, attain a false birth certificate, or your own if you are feeling ballsy, and go to your local S.S.A. (Skip this if you are using your own.) Once at the office, tell them your horrible story about losing your S.S.N. and ask for a replacement. Now that you have your replacement, plan out a route that would allow you to hit as many banks as possible in one day. Go to the banks. Ask for loans. Get approved. Take all of your cash and drive to Vegas. Walk into the brightest casino on the strip. Bet it all. If you lose, no worries, just try again. If you win, nice, now you can go again. Repayment is only optional and 99.9% of people who use this method do not take the repayment route, it makes no sense.
Medicaid fraud
Does running a boutique RIA conflict with your current job? Compliance-wise
By the way, I feel exactly like you.
Hey mate! I've been where you're at. Currently rolling up RIA's and other MM companies and taking them public. Much more fun when you do it for yourself lol. Shoot me a message.
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