@ quantz
ok, I see what you mean now...
I would be curious to know: would anyone participating in this thread be willing to share briefly their story, from how they started to where they are now... how much capital they had at the start and how many years it took them to grow to a proper fund with several millions AUM?
Early Stage Start Up Hedge Fund
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TSWP
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- Joined: Thu Jan 01, 2004 12:00 am
Early Stage Start Up Hedge Fund
The only thing that counts: can you make money?
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talolard
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- Joined: Thu Jan 01, 2004 12:00 am
Early Stage Start Up Hedge Fund
Hi TSWP,
I'm in a pretty similar situation to yourself and thought I'd share what I've done so far.
My main goal at the moment (And I assume yours as well) is to establish a track record, since I don't have enough money I'm trying to raise it.
I'm a fairly young guy in Israel where entrepreneurship and "Algo Trading" are big buzz words. I've written and have back tested it extensively ti positive results and have been working on finding the suitable partner to help finance the proof of concept stage.
I've approached many people in the local business community about investing. As I mentioned, I'm a young guy in a society that values entrepreneurship touting a product that is a big buzz word at the moment. This makes it fairly easy to get a meeting, by attending networking events and calling everyone I know and having a brief elevator speech ready. Just talk to everyone.
My strategy has a "low risk profile" and when I pitch the partnership to potential investors I emphasize that. I've taken to separating the capital I need to trade the system from the capital I need for operating costs. I request an investment in the amount of the operating capital required and ask for the trading capital as a loan. I set some maximal draw down, say 10% and agree to return whats left of the trading capital if that draw down is reached, otherwise the whole of the loan is returned within some time frame. This mitigates the risk your investor takes on, which both makes you more attractive and gives you a bit more leverage when negotiating.
Since I've adopted this model I'm getting much better responses and I feel this is a fair structure, which gives me comfort (to say no) when negotiating.
I think you should ask yourself what your end game is. Do you want to prove your strategy and sell it, start your own hedge fund or something in between?
Sorry for the rant. Good Luck
I'm in a pretty similar situation to yourself and thought I'd share what I've done so far.
My main goal at the moment (And I assume yours as well) is to establish a track record, since I don't have enough money I'm trying to raise it.
I'm a fairly young guy in Israel where entrepreneurship and "Algo Trading" are big buzz words. I've written and have back tested it extensively ti positive results and have been working on finding the suitable partner to help finance the proof of concept stage.
I've approached many people in the local business community about investing. As I mentioned, I'm a young guy in a society that values entrepreneurship touting a product that is a big buzz word at the moment. This makes it fairly easy to get a meeting, by attending networking events and calling everyone I know and having a brief elevator speech ready. Just talk to everyone.
My strategy has a "low risk profile" and when I pitch the partnership to potential investors I emphasize that. I've taken to separating the capital I need to trade the system from the capital I need for operating costs. I request an investment in the amount of the operating capital required and ask for the trading capital as a loan. I set some maximal draw down, say 10% and agree to return whats left of the trading capital if that draw down is reached, otherwise the whole of the loan is returned within some time frame. This mitigates the risk your investor takes on, which both makes you more attractive and gives you a bit more leverage when negotiating.
Since I've adopted this model I'm getting much better responses and I feel this is a fair structure, which gives me comfort (to say no) when negotiating.
I think you should ask yourself what your end game is. Do you want to prove your strategy and sell it, start your own hedge fund or something in between?
Sorry for the rant. Good Luck
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TSWP
- Posts: 0
- Joined: Thu Jan 01, 2004 12:00 am
Early Stage Start Up Hedge Fund
Hi Talolard,
thank you for your insight, very appreciated.
To answer your question:
"I think you should ask yourself what your end game is. Do you want to prove your strategy and sell it, start your own hedge fund or something in between? "
I want to start my own hedge fund, that's all.
Partners are welcome, under certain conditions, or otherwise I can be partner of existing structures, again: under certain conditions.
I am well aware of how hard it is to raise funds, still if you have a good product and you know what you are doing, you have to knock all the doors, and insist until you find someone that says 'yes'.
Good luck.
thank you for your insight, very appreciated.
To answer your question:
"I think you should ask yourself what your end game is. Do you want to prove your strategy and sell it, start your own hedge fund or something in between? "
I want to start my own hedge fund, that's all.
Partners are welcome, under certain conditions, or otherwise I can be partner of existing structures, again: under certain conditions.
I am well aware of how hard it is to raise funds, still if you have a good product and you know what you are doing, you have to knock all the doors, and insist until you find someone that says 'yes'.
Good luck.
The only thing that counts: can you make money?
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granchio
- Posts: 0
- Joined: Thu Jan 01, 2004 12:00 am
Early Stage Start Up Hedge Fund
I'll give you a story of a guy I know, who had a good HFT strategy with very high Sharpe, low capacity (order 10's of M$), WITH proven track record.
He was offered small seeding from friends and family.
He decided to take more traditional, institutionalised backers' money fund, maybe because of being honourably worried about putting friends' money in harm's way.
We are talking smallish amounts here (way less than 10M at the start).
That meant quite a serious delay (~1 year) before getting to market, because of the all red tape involved in those type of deals... bitching, moaning, distrust, lawyers, etc.
Think of the money NOT made by not trading... think of how much the markets can change in a year, making your previous strategies useless...
So do start trading with real money, even very little, as soon as you can. Make hay while the sun shines. These are interesting times, the market structures have already changed a lot, and they could change again. _And_ you get the track record.
PS I hope you have seen the post by FDAX at the beginning of this thread. In case you have not... my suggestion would be to follow up on it ...
He was offered small seeding from friends and family.
He decided to take more traditional, institutionalised backers' money fund, maybe because of being honourably worried about putting friends' money in harm's way.
We are talking smallish amounts here (way less than 10M at the start).
That meant quite a serious delay (~1 year) before getting to market, because of the all red tape involved in those type of deals... bitching, moaning, distrust, lawyers, etc.
Think of the money NOT made by not trading... think of how much the markets can change in a year, making your previous strategies useless...
So do start trading with real money, even very little, as soon as you can. Make hay while the sun shines. These are interesting times, the market structures have already changed a lot, and they could change again. _And_ you get the track record.
PS I hope you have seen the post by FDAX at the beginning of this thread. In case you have not... my suggestion would be to follow up on it ...
Dubito ergo sum
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TSWP
- Posts: 0
- Joined: Thu Jan 01, 2004 12:00 am
Early Stage Start Up Hedge Fund
@ granchio:
thx for the input.
I can see everyone here is really suggesting to go the friends and family way and I take that recommendation very seriously - I mean it.
Granchio, may I contact you privately via your profile email?
thx for the input.
I can see everyone here is really suggesting to go the friends and family way and I take that recommendation very seriously - I mean it.
Granchio, may I contact you privately via your profile email?
The only thing that counts: can you make money?