A good friend and former sports teammate that I've known since junior high school started up his own alternative investment fund (by starting up, I mean legally establishing a fund) in late-2014 and has asked me if I am interested in joining as a "managing partner" (obviously, titles are relatively meaningless for a startup). We've met up on and off over college and post-college years, but I still remember him as being a sharp kid in junior high and high school.
His previous background is inand I think he had been reasonably successful but decided he wanted more of the profits he was generating for his firm (typical story). He has done all the necessary legal paperwork and has the necessary infrastructure in place (most of it outsourced) and has already started deploying the fund's capital (I don't have all the specific details of his firm's mandate, but it seems like a pretty vanilla L/S equity). He has gotten office space although its more of a "hedge fund hotel" type place, but it seems he was able to get himself good deal.
Obviously, the most important thing is how much money he's been able to raise... and it's not bad (if we are talking early 1990s)... $1.2mm on his own through friends and family. It might sound like an OK story so far, but I'm under no illusions. My friend in all likelihood is not being 100% altruistic in reaching out to me. He does know about my family background, and although he has not said so explicitly, he's probably hoping that my father can throw in another $1mm or $2mm if I join.
It could be an interesting opportunity, but everyone I hear from in the industry says the days of starting a hedge fund with $3 million a la Daniel Loeb are over. Worse yet, I don't have any previous investing experience in a formal capacity (aside from my personal accounts). I am curious to know how people who currently work in the industry regard experience at a start-up fund. Obviously, the experience is not going to be viewed the same as working at a Tiger Cub, but just how bad would it be? Is there any precedence for someone to go from working to a start-up fund to a more established fund?
My current situation:
IB at one of the major firms
Unmarried (e.g. don't have a wife and kids to worry about)
Enough savings to survive 2 years with no salary (I'm assuming that we won't be drawing a salary until we get to a certain level of AUM)