- Posted June 30, 2014 by
Christian Broda on Starting Your Own Hedge Fund
1. Covering the bare essentials for a hedge fund team.
Hedge funds are teams of investors, and they require certain parts to get the ball rolling. That's going to include junior analysts, traders, and a chief financial advisor for oversight. These are just a few of the essential components, but they are the key to getting the hedge fund off the ground.
2. Law firm relationships.
Hiring a law firm and forming a relationship with them is a key component of success. There is always a need for a hedge fund to have legal representation, and advisors. So the law firm is essential, but steering clear of the big law firms might be a necessity as they can tend to overcharge.
3. Anchor capital acquisition.
You need seed funding to get the hedge fund off the ground, as the idea is to find investors and not end up spending your own money. That means attracting capital investors, which is extremely difficult and an excruciating process. You need to cater to what they're looking for, and be prepared for the long courting process that comes with investments.
4. Choosing your prime broker.
This is the actual stock agency that you're going to go through to make all of your actual trades. Someone like Goldman Sachs, or Morgan Stanley for example. This is for the record of your stocks, and to enable all purchases that the hedge fund will be making.
5. Have a professional office space.
Attracting key investors, and prolonging the life of the hedge fund means looking the part. It's going to be even more difficult to attract seed funding if you're trying to run the hedge fund out of your home. So make sure that you rent space wherever you can. As long as the premises looks professional, and has that office worker vibe, you're going to be set.