Tried to start my own fund, not really working out, what should I do from here?
Alright boys, I tried to start my own quant fund with a friend from my masters. The track record is decent so far, but a year and a half have passed, and it is clear that raising money is going to take time. So, I need a job. Problem is, I've not the faintest clue where my experience lands me at the moment. Applying to everything, but guidance would be appreciated.
Background:
Finance and Accounting Undergrad - Super not a target school Masters in Economics - Target school (one of the two British ones) No internships or jobs at bulge brackets. Hedge fund slot on resume probably looks like I'm making things up.
Skills:
Can code in Python, do not consider myself very good though. Can do LBO/DCF/ basic crap that undergrads can also do, but not very experienced in real world deals. Can do econometric models, but not an A tier econometrician.
Problem is, I don't consider any of my skills A grade. WTF do I try for? Should I just be an analyst at some IBank? Is trying for PE/ Quant funds worth bothering with? Is ER even hiring at all nowadays?
Most of all, how do I network now? I can't really network in London anymore, and my old non-target-school network is worth barely anything.
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If the actual fund performance is good and you like what you are doing, then why bail over short term fundraising needs?
Actual fund performance is fine, but honestly it's with my and my friend's money (100k), so people don't take it as seriously as they might.
It looks like it will probably take at least a year or more to raise real money to the point where we have a business which pays the bills, and to be frank I don't want to live with my parents, hence the job search.
if you have a track record over 1.5 years, max drawdown under 5%, sharpe ratio over 1.5, max drawdown under 2008/2009 lehman blowup backtest scenario under 10%, and strategy that can scale to over 200mm AUM pre-leverage without suffering from liquidity, AND if you can tell a story about WHY your strategy works, then you have a shot at a seat at a multi-manager (like millenium). i would suggest trying that (if you qualify).
If you don't meet that threshold, and since you already feel comfortable programming, then you should improve your coding skills and get a job as a programmer while you figure out your next move.
Having only your money and your friends money in the fund isn't why people don't take it seriously. You aren't taking it seriously and you are projecting that in conversations.
Based on your post your strategy is working and I'll make the assumption that it is scalable. Who's money is in the fund is almost inconsequential. In fact, that's a great story to tell:
"My partner and I put up all of our assets to build this fund model and now that we have a track record of success through a volitile market period we are ready to offer what we have created to additional investors. Let me walk you through our thesis..."
Think about this decision in terms of a trade.
One more year of living at home with your parents gets you the ability to pay your bills and have a real business. This looks like a good trade. Are you sure you want to pull the plug?
Consider an IR position at all? Skill set is obviously incredibly useful when raising capital later for your own fund and you seem to be relatively full circle.
Only problem is that you'd likely be stuck signing a non-compete or something similar which might defeat the whole point.
That might be worth looking in to actually. I hadn't thought of that, thanks. Honestly non-competes are a bit sticky everywhere.
Seeing as I don't intend on renouncing my equity share in our little fund, it might be quite problematic even in Ibanking, which really has nothing to do with any of our activities.
Only shitty thing is that it's easy to get stuck in IR but if you're going to try and start a fund later, it's a not a bad skill set to have.
I'm in the same boat as others advising you not to give up -- sounds like an exciting venture and I guarantee you that working for yourself is going to be better than an IB analyst job.
What has been your fundraising strategy to date -- is it institutional focused? In the short term I'm sure you could get some friends and family money in there and take your AUM up to at least a million or two.
One other thought (not sure how viable, I don't know quant asset mgmt / fundraising well) would be to find some BSD out of the asset management industry who has a track record at a name-brand quant firm. Tell him you've developed proprietary quant technology, explain your track record, and offer him a big chunk of equity to come run the fund. If he was looking to strike out on his own anyway, you've saved this guy a lot of trouble (i.e. he doesn't have to build his own product / thesis), and institutionals will back an experienced guy with a good track record.
I get where you're coming from. I was in the same boat leaving uni and went to work for an IB. There's something to be said for backing yourself, and at the same time it's great to have a tangible record of working for someone else and being self sufficient [ie. not living at home], saving to build up capital, etc.
Your skills section sounds like me when I was leaving uni... "I can code but not the best", "I can model but not the best", "I can stats but not the best". It's amazing how easy it is to underestimate yourself / overestimate the complexity of the industry.
Without giving too much in the way of details on me... I speak to these firms all the time. I help them build the business, raise capital, find talent (I'm not a recruiter, it's all 'do you know anyone who can do xyz'). I have a couple of contacts looking for your skills to join as a junior, and one or two who run emerging programs for guys your size.
If you're serious about either continuing your fund or finding a role, PM me and we can grab a coffee/pint if you're still in London. But I'm not talking to you until you can prove that you've done this by showing me the track of your fund, because I can't find that you answered the question above.
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