Starting a fund / raising capital

Quote from clerk:

so, how are you guys doing on getting insurance?
e&o/d&o seems to be the killer, so your business structure is ultimately going to be shaped by the level of premiums you can afford.
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Well, given how I didn't even know what E&O insurance stood for before this, I guess not very far.

If this expense is too prohibitive, I will probably prefer to forgo the insurance. I imagine an LLC structure will protect your personal assets. And I imagine I can only get sued if I lose people money. In that case, even assuming I was somehow negligent and liable for damages, what is my company worth anyway?

Plus, if I assume that raising institutional money will be next to impossible right now, and I need to start with friends, I'm probably safe from getting sued.
 
How to subscribe the SEC enforcement newsletter? I cannot find how on SEC's website. Thanks.

As far as why these rules exist... I subscribe to the CFTC/SEC enforcement newsletters. The amount of fraud out there is unbelievable.
 
Quote from emk662:

How to subscribe the SEC enforcement newsletter? I cannot find how on SEC's website. Thanks.

As far as why these rules exist... I subscribe to the CFTC/SEC enforcement newsletters. The amount of fraud out there is unbelievable.
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It is. What is even more fascinating is the amt. of capital some of these characters are able to raise.
 
Quote from the1:

Raising seed money is difficult but once you get off the ground and begin turning profits raising additional capital is very easy. In fact, the money will find you.
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So, if you want to establish a fund,

1) So, how much absolutely minimium seed money is required. 50k? 500k?2m?
2) What would be a terrific track record on this seed money. 50% annual return with 15% maxDD. or 100% return with 20% maxDD.
3) For how long this terrific track record is needed.
4) How does money find you? You list on barclayshedge IASG etc.?

TIA.
 
Quote from gmst:

So, if you want to establish a fund,

1) So, how much absolutely minimium seed money is required. 50k? 500k?2m?
2) What would be a terrific track record on this seed money. 50% annual return with 15% maxDD. or 100% return with 20% maxDD.
3) For how long this terrific track record is needed.
4) How does money find you? You list on barclayshedge IASG etc.?

TIA.
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One thing I will say is go look at databases...the easist ones are managed futures/currencies (CTA/CPOs)....even the best do CAGR of 35-40% with almost equal in MaxDD and sharpe's around 1 or less. And these are the guys managing $100's of millions with long established track records.
 
Quote from Stok:

One thing I will say is go look at databases...the easist ones are managed futures/currencies (CTA/CPOs)....even the best do CAGR of 35-40% with almost equal in MaxDD and sharpe's around 1 or less. And these are the guys managing $100's of millions with long established track records.
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Agreed. One thing I have said before on this forum and will say again: Putting together $500K-$1M of your own capital and then searching for new LP's for the fund is likely a good start. I say this from experience over the past 9 months meeting with potential investors etc. While I have some sizable returns (derivatives) the account is less than $250K and they are a little uneasy with that. They wanted to see 12-24 months with $500k+ and I don't blame them. The thing to remember is that if you have the returns the money will come, I think it is just patience and consistency that is the key in this game.
 
Sorry to bust bubbles but track record is the least critical thing when it comes to raising capital. Remember, everyone has a great track record otherwise they wouldn't be starting a fund. Having a clearly defined niche strategy that can last into the future is critical--otherwise your just another fund in a world full of choices--and the others have oh so much more to offer than you ever could.
 
Quote from marketsurfer:

Sorry to bust bubbles but track record is the least critical thing when it comes to raising capital. Remember, everyone has a great track record otherwise they wouldn't be starting a fund. Having a clearly defined niche strategy that can last into the future is critical--otherwise your just another fund in a world full of choices--and the others have oh so much more to offer than you ever could.
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That's a bit subjective. I know plenty of funds that are short-term 24-36 special entities. If you're running a trend following fund you absolutely need a track record. Unless your speak from experience with the niche strat and not needing a P/L, DM me, I would like to chat.
 
Quote from Busta21:

That's a bit subjective. I know plenty of funds that are short-term 24-36 special entities. If you're running a trend following fund you absolutely need a track record. Unless your speak from experience with the niche strat and not needing a P/L, DM me, I would like to chat.
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Sorry, I was misunderstood. A track record is needed but it's the least important factor for the reason I listed. Good luck to you!
 
Quote from marketsurfer:

Sorry, I was misunderstood. A track record is needed but it's the least important factor for the reason I listed. Good luck to you!
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Thank you!
 
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