It’s getting tougher and tougher to launch a hedge fund these days. A few years ago you could start up shop with $25 to $50 million. Now, from what we’re hearing, it’s more like $100 million.
That means your fund raising has to be absolutely on point, and in that case, it’s all in the pitch. You can have marvellous ideas and a wonderful background, but if your pitch isn’t perfect you won’t have investors.
One hedge funder’s former colleague who is going through the process told us that after your pitch is through, there’s usually one question on every potential investors lips these days:
How much of your own money is going into this fund?
Investors want to know that you have a stake in the success of the fund, and a large one. That said, it’s safe to say that if you don’t have a lot of personal money, you’re not going to be able to start a fund at all. No one will invest with a hedge funder who isn’t confident enough to put their own fortune on the line.