Finding investors to start a hedge fund

[i am nobody]

How does the money find you?

From mouth to mouth thru broker. My broker made recommandations about me to his clients.
I was invited in a meeting with between 20 and 30 millionaires. They meet every month to discuss investments. They were very careful and suspicious. They checked my personality and after everything was OK I had 7 clients in 1 time from this group. My trackrecord was only 6 months but very impressive.

None of them will give you money because they could use your towel, nor if you go and drink with them. So your anecdote is to me an anecdote you made up yourself. It will not work with 90% of the rich people. But then I speak about REALLY rich people.

 

[gkishot]

IMO, size does matter. Building a track record with $25K will not bring in investors. Depending on your target market, you need some reasonable size account for it be be interesting. That value will be different for every strategy and investor profile.

I agree with your other comments. Have fun, make money. However if you hope to interest investors in the future, you need a structure to your trading and start to treat it as a business.

Bob

How do you build a track record? Why isn't liquidity of your instruments ( as opposed to your account size ) that matters?

 

[gkishot]

From mouth to mouth thru broker. My broker made recommandations about me to his clients.
I was invited in a meeting with between 20 and 30 millionaires. They meet every month to discuss investments. They were very careful and suspicious. They checked my personality and after everything was OK I had 7 clients in 1 time from this group. My trackrecord was only 6 months but very impressive.

None of them will give you money because they could use your towel, nor if you go and drink with them. So your anecdote is to me an anecdote you made up yourself. It will not work with 90% of the rich people. But then I speak about REALLY rich people.

What is your performance?

 

[lawrence-lugar]

One word: NETWORK. Go to F1 in Monaco, go to the top ski resorts, etc , follow the party circuit of the UHNW's ---- mingle , make friends, that's the key--- or you just might meet a few on elitetrader-----

You just might make friends with a guy or gal whose family are billionaire hedge fund investors-----

Rich people are careful and conservative with their money.
You can't just basically walk up to/"Network"...with one...and say: Hi Mr Rich Man, I have an awesome track record...Invest with me.

The only way to become a hedge fund manager/find investors....is to basically Already be one. and have a sizeable chunk of your own net worth in that fund. and have connections already, that stems from already being in that business for a number of successful years. before branching out on your own.

all the famous/major hedge fund managers/founders...they all pretty much started this same route. there's no secret or shortcut to it.

 

[marketsurfer]

From mouth to mouth thru broker. My broker made recommandations about me to his clients.
I was invited in a meeting with between 20 and 30 millionaires. They meet every month to discuss investments. They were very careful and suspicious. They checked my personality and after everything was OK I had 7 clients in 1 time from this group. My trackrecord was only 6 months but very impressive.

None of them will give you money because they could use your towel, nor if you go and drink with them. So your anecdote is to me an anecdote you made up yourself. It will not work with 90% of the rich people. But then I speak about REALLY rich people.

Ok, was this a long time ago? Most everyone uses discount online brokers today-- very few live brokers left.

Your absolutely wrong that people don't invest with people they like--- again you are wrong about the disposition of most UHNW folks-- makes me wonder if anything you say is accurate.

surf

Thanks!

surf

 

[i am nobody]

Ok, was this a long time ago? Most everyone uses discount online brokers today-- very few live brokers left.

Thanks!

surf

It was in the period that daytrading was still unknown and orders were given by phone. Pre internet. I was trading with a Teletrac from Dow Jones Telerate, before they changed to the first version of Tradestation (3.5 I think). In the 90's. My broker was 1 of the biggest in the US. I was daytrading forex at that time.

http://www.highbeam.com/doc/1G1-13621688.html

 

[marketsurfer]

Rich people are careful and conservative with their money.
You can't just basically walk up to/network...with one...and say: Hi Mr Rich Man, I have an awesome track record...Invest with me.

The only way to become a hedge fund manager/find investors....is to basically Already be one. and have a sizeable chunk of your own net worth in that fund. and have connections already, that stems from already being in that business for a number of successful years. before branching out on your own.

all the famous/major hedge fund managers/founders...they all pretty much started this same route.

#1-- they don't care about your "track record" as EVERYONE knows that past performance is not indicative in ANY way to future performance.. I know a group that actually only invests in hedge funds AFTER they have a huge drawdown--- only the NAIVE retail level clowns care about track record ( for the most part)
Furthermore, EVERYONE has a great track record if they are selling it, so even with a great track record you need much much more to differentiate yourself from the rest of the great track records.

#2 they do care about the FUTURE prospects of your STRATEGY and if they LIKE and TRUST you.

surf

 

[marketsurfer]

It was in the period that daytrading was still unknown and orders were given by phone. Pre internet. I was trading with a Teletrac from Dow Jones Telerate, before they changed to the first version of Tradestation (3.5 I think). In the 90's. My broker was 1 of the biggest in the US. I was daytrading forex at that time.

Yes, makes sense. thanks

 

[i am nobody]

What is your performance?

If the performance is low they call you a loser, if it is high you are fake. So what's the use to answer this question?

If 7 people invest, and you have to start up a fund with all the paperwork with CFTC and NFA, and register as CTA, it means that probably it is a substantial performance.

 

[Sig]

Best advice your going to get, not just in trading/business.

People heavily underestimate the role randomness/luck plays in our life.

Surround yourself with winners, big fish, fat cats not bums and your opportunities increase, who knows someone may take a chance on you even if they don't you will gain valuable insight/information new contacts etc

Good luck.

While networking is key and you may get lucky hanging out at ski resorts, that's a really, really hard way to do it. If you can get in, going to one of the top 5 MBA programs will get you an excuse to talk to a bunch of these same people in business and non-business settings where they're expecting and receptive to you talking about what you are looking to accomplish. Add to that the contacts of your classmates and alumni, the internship opportunities, and the post-MBA job opportunities and the path is far, far easier. There's really little difference in the basic business education of any MBA program, but one of the top programs will completely change your perspective and access to the part of the world that you're seeking access to.
I'd also note the buy-side world is really concerned with you "doing your time" as an analyst or associate, moving up through the ranks before you strike out on your own. No matter how smart you are, because everyone in that business is pretty smart. You might research how many sustainable size hedge funds (over $100M at least) were started in the last 10 years by someone under 40 with no finance experience and no existing wealth or family connections. Nothing's impossible, but I've never heard of anyone accomplishing this. You need to plan on putting in the time as a spreadsheet jockey with 80 hour weeks, for years, if you want a serious shot at this. By then you very well may realize that the "prize" isn't worth it.