Hedge Fund Launch LLC Analyzes Trends Among Start

Given the interest, Hedge Fund Launch officials have taken the opportunity to gather statistics on the startup hedge fund market. Of the 570 managers registered on the site, 464 provided the detailed information on their firm and strategy that prospective seed investors seek. About 56% of those managers are searching for US$5 million or less to fund their operations, while 38% are looking for between US$6 million and US$25 million. Only 6% are asking for sums greater than US$25 million.

A good number of managers are willing to provide equity in their firm in exchange for seed capital. According to Hedge Fund Launch: 35% would exchange between 11% and 25% of equity; 25% would surrender between 2% and 50% of equity; 23% of managers are willing to offer between 6% and 10% equity in their firm; 11% are willing to relinquish 5% or less; and only 4% would trade more than 50% equity in exchange for seed capital.

Part of the criteria Hedge Fund Launch requires is information on a manager’s experience. Looking at the managers on the platform, not quite half (49%) have five years or less experience in managing portfolios in a manner similar to their proposed fund. The managers’ experience ranges from day traders and retired doctors to experienced hedge fund mangers, mutual fund managers, and proprietary traders looking to launch fund, according to Mr. Kuchta. Most firms (54%) plan to launch with two to three individuals, while 22% will be one-man shops and another 24% will start with four or more on staff.

Among startups, the most popular strategy is hedged equity (31%), according to Hedge Fund Launch. A total of 15% are planning non-directional arbitrage funds, 13% global macro and managed futures funds, 13% multiple strategies, 2% event-driven funds and another 19% said they would employ other strategies that didn’t fit in those categories.

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