Hedge Fund Opportunity

Fifty2Aces, if you take the time to read some of the earlier entries, you will notice that the £100,000 investment not only captures 2.5% of the management company, but also 2.5% of all management (2%) and performance fees (20%). This could potentialy amount to £millions. Only £25,000 per investor will be used towards setup costs, the remaining £75,000 per investor will be used as a guarantee towards seed capital for incorporation of the fund. I will personally take none of the startup capital. This will be used entirely for setting up the Hedge Fund.
 
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Depending on the sentiments of the Hedge Fund partners, we may take the management company to the public market. I'm in preliminary discussions with various corporate advisers about the possibility of listing 25-50% of the management company on the PLUS market, 6-months after launch. This will have various benefits for the company, notably gaining access to a stream of investment capital for expansion of the management company overseas, and perhapes even for the incorporation of new funds that exhibit different investment characteristics. These are all early stage ideas, and will be completely dictated by the management team.
 
An enterepeneur sees his bank manager to discuss a possible business loan for his new venture.

Bank manager: What are your 5-year projections?

Entrepeneur: What would you like them to be?

Grant.
 
Phoenix,

I return to a previous point re splits. Regardless of how you cut it with management and performance fees you still get 75% of everything. How would you justify this to a potential investor? What do you bring to the table, so to speak (raising capital is not difficult)?

Grant.
 
phoenixcapital said:
Fifty2Aces, if you take the time to read some of the earlier entries, you will notice that the £100,000 investment not only captures 2.5% of the management company, but also 2.5% of all management (2%) and performance fees (20%). This could potentialy amount to £millions. Only £25,000 per investor will be used towards setup costs, the remaining £75,000 per investor will be used as seed capital for incorporation of the fund. I will personally take none of the startup capital. This will be used entirely for setting up the Hedge Fund.
Click to expand...

And as grantx rightly points out - if the 10 investors each get 2.5% of fees, that adds up to 25% total, leaving you with the other 75% - so you would appear to be getting 30x the share of any other investor (3x all their shares combined). Are you going to be investing considerably more than everyone else?

How much seed capital are you contributing? What share of the fund will be yours? What share of the profits will you take?
 
GrantX, I could say that I bring 15 years of financial markets experience to the table, but that may not be enough. I could justify my standing by saying that I am the ideas man, the one who conceptualised this initially, but that may not be enough. I could say that I will be responsible for selling the Hedge Fund and what it represents to the outside world (hence raising AUM), but that may not be enough. I am creating something here from scratch, something that could be substantial. An opportunity to take part in the establishment of a financial company, that could one day become a significant concern. So the percentages may seem small, but the potential for a substantial return is immense. Try to find another investment opportunity that will within 12 months pay back your entire original investment, and after a period of 5 years generate a residual income in excess of £1MM per year. I'm sure you'll be hard pressed to find one. And all this for a initial capital outlay of £25,000. The remaining £75,000 is to be kept by the Hedge Fund partners, and used purely as security for the purpose of setting up a trading account, and only to be drawn when needed. At the point of launch, we should have already attracted £50-£100MM from the investment community anyway, so chances are the capital drawdown facility will not be required. Investment seed capital will be raised purely on the basis of our investment strategies and the backgrounds of the Hedge Fund partners.
 
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I could say that I bring 15 years of financial markets experience to the table, but that may not be enough. I could justify my standing by saying that I am the ideas man, the one who conceptualised this initially, but that may not be enough
Definitely not enough.
You see this guy below got people to invest with him because he showed a track record of actual profits.
No talk of being an financial man or conceptualising ideas or being good at sales, He basically took $12k
And turned it into $1.65million.
When he started his hedge fund the offers of cash came pouring in.
Now if you want to start a hedge fund this is the background you need!
Do you have a track record like this person?
Amazon Online Reader : An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
 
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Presumably a joke

phoenixcapital said:
Fifty2Aces, if you take the time to read some of the earlier entries, you will notice that the £100,000 investment not only captures 2.5% of the management company, but also 2.5% of all management (2%) and performance fees (20%). This could potentialy amount to £millions. Only £25,000 per investor will be used towards setup costs, the remaining £75,000 per investor will be used as a guarantee towards seed capital for incorporation of the fund. I will personally take none of the startup capital. This will be used entirely for setting up the Hedge Fund.
Click to expand...

Sorry - I don't usually mock, but to value a start-up with no track record, no assets and no staff at £4m is laughable.
 
PheonixCapital still avoids the question...How much liquid CAPITAL he is actually investing. Clearly none.
15 years experience is nothing, some of the Traders will probably have more and end up teaching and advising you.

PheonixCaptial: I like your energy and your drive. However, you can quote us great text book theory on setting up and running hedge funds as well as impress us with theoretical numbers until you're blue in the face. The bottom line is that you need a strong track record and a need to be less greedy in owning 75% of the business. Fulfilling your own ego and fantasy is just not going to work in this forum. There are other people out there who will do it for less.
Show people a good trading system with an edge and the money will flow in. Then you can hire an outside business to set up the hedge fund structure.

Suggest you read the book Gamma recommended above.

Best of luck!
 
grantx said:
An enterepeneur sees his bank manager to discuss a possible business loan for his new venture.

Bank manager: What are your 5-year projections?

Entrepeneur: What would you like them to be?
Click to expand...

:cheesy::cheesy::cheesy::cheesy:

Good one G. So true as well........
 
Anley,

Do you think anyone prepares projections which at the end of 5 years, for example, they envisage £5m in debts, plummeting annual sales (from the first year on), and facing a prison sentence for tax evasion, VAT fraud, bribery, and murder of competitors and insider trading? Wonder what the interest rate would be on that loan. Would that invoke a ccj? Might be a bit awkward getting a mortgage after that.

Grant.
 
Phoenix,

Don't despair. One possibility is to put up say 25% (£250,000) of the capital but everything is then split equally. This would show commitment and serious intent. I reckon this would be a good deal for yourself because it will be the traders who will be generating the profits, and you benefit very well from their expertise.

Good luck.

Grant.
 
Grantx, If you don't mind me asking......but are you a representative of the FSA? You are making some valid and thought provoking suggestions, but I can't help but think that you have ulterior motives. I have come onto this forum in good faith with a genuine business opportunity. If you wish to belittle and patronise, then that's your prerogative. Being a more senior member of this forum, I would have thought that you would exercise a little more caution in what you say. Maybe I should have presented my ideas elsewhere.
 
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Phoenix

I just think he and others are trying to be realistic. Everyone and his aunt (or at least wanted to 1-2 years back when they were really in fashion) wanted to set up a hedge fund. But saying this or that and talking about this potential or that potential is easy but in reality it's cold hard facts that win and cold hard facts = track record (over time) that can be auditied.

Can you achieve your goal, of course anything is possible but it's going to be very very hard especially as 2008 will prove (by the performance figures they all report) that hedge funds as investments vehicles return pretty dismal figures in relation to what they promised or everyone thought. Always expections to the rules but not many.

Good luck anyway, and as someone once said 'don't let the buggers get you down'.
 
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"Maybe I should have presented my ideas elsewhere"

Dragon's Den perhaps?
 
phoenixcapital said:
I have come onto this forum in good faith with a genuine business opportunity.
Click to expand...

Phoenixcapital - that's the issue - I think the advice you are getting here is that whilst you may think that, no-one else does - so perhaps it is worth re-thining your plan/numbers etc. I just don't see what you have to offer as a business opportunity. Sorry.
 
Phoenix,

If I've belittled and patronised, I apologise - it was certainly not my intention to cause offence. However, the points I've made are valid - I've done everything you are proposing, that's why have some knowledge.

Grant.
 
Baldwreck said:
Phoenixcapital - that's the issue - I think the advice you are getting here is that whilst you may think that, no-one else does - so perhaps it is worth re-thining your plan/numbers etc. I just don't see what you have to offer as a business opportunity. Sorry.
Click to expand...

He does offer a great business opportunity IF he can produce the returns. And 'IF' is the key that everyone here is concentrating on, and it will be the key for anyone else when they look at the business plan.

In fact there are two 'ifs' the first is - can the money be raised, and then - can the returns be generated.

Again, it's all possible but very very hard.

Good luck anyway.
 
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