elite M&A -> elite HF -> failed startup founder -> decent HF?

If you leave the hedge fund industry after 2 years to start your own company, how hard is it to go back into the industry assuming the startup fails? Suppose you did 2 years banking at a great group then 2 years at an elite hedge fund. I am considering starting a company, but want to understand what the downside case really is.

 

holy shit what's your rationale for 1 million. that's so much! how many years of run-way are you assuming. if it helps, I would probably start a company that only requires sweat equity / VC backing and not a ton of my own money (not trying to start a hedge fund, but i agree that 1mm of personal money is what's necessary for starting your own fund).

i've saved like 250k in my personal savings and another 200-300k in accounts i have locked up and can't touch. i grew up pretty middle class and don't have expensive tastes, so I could live off of that for years.

 
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So true, i think the "best of both worlds" I am considering now is to take some time off to read and learn from books about basic startup job skills (marketing, basic legal / admin stuff, how to design products, general theory on what's makes startups successful), then maybe work again for 1-2 years at a HF while doing basic work on a startup on the side. Hopefully, I get some basic traction and can quit with that. If I don't get traction, then at least maybe I learn some stuff along the way. I have noticed from crawling through LinkedIn that ex-HF people that start companies tend to do it after ~4-6 years of total post-college experience and that in nearly all cases they do not return to the HF industry. If these folks go back into investing, what I've noticed is many go back and do some kind of VC or angel investing. There's some famous exceptions. Not that this would apply to me in any likely scenario, but Peter Thiel started his macro HF after leaving his job as an options trader and using money he made from Paypal. It's unlikely, but the dream scenario where I do re-enter the industry would be to do something that fits that general fact pattern (try to start a successful company and if I can sell it use the proceeds to start a modest investment firm, though not necessarily a hedge fund).

 

You'll be approximately fine.

That is, you'll be no worse off than the hordes of people that get fired when their MM pod or their hedge fund shuts down.

Guarantee you'll get back? Of course not. That depends on how good you are (at investing, but also just at recruiting) and the quality of your network. The fact that you took two years off for a startup might or might not help you relative to someone whose shop just closed.

FWIW I know 2 people that have done this (their startups both failed after a year) and ended up with great spots afterwards. One didn't even have HF expereince beforehand (think he was sellside).

Outside of the 2+2 type experience HF recruiting is such a crapshoot anyways that I don't think its worth overthinking.

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