Why was it so easy to start hedge funds back in the 80s and 90s?
Tom Steyer started Farallon 5 years out of his MBA in '86. Ackman started Gotham Partners (his first fund) straight out of HBS . Cramer started his own fund just 3 years after starting at Goldman. Lampert started ESL 4 years after starting at Goldman. The list goes on and on.
Was money that easy to come by in the '80's? What 20/30-something starts a hedge fund today?
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Comments ( 12 )
There are still hedge funds today launched by people around 30, but it's difficult to know about them because they're small. Also, the hedge fund space is more institutionalized, raising the bar for compliance and other support functions. A good way of starting young is starting small, which means raising capital from an HNWI, a wealthy family helps with this.
You can thank the SEC for that. World's dumbest regulator staffed by people too stupid to get real jobs.
Gee, I dunno. Maybe because the industry was just getting started back then?
I ask the same thing about crypto funds right now. Why don't you go start one, even my bartender is raising money!
the sentiment around active investing has changed a lot recently, surely that plays a factor.
I know a guy who started a fund under 25 with great institutional backing. It is now multi billion.
When he's 20 years old ish he wrote theses that received attention from some of the very sophisticated investors. If you pick some of the best guys in the community and ask the guys about him, the chance is that they have read something that he wrote back in the days.
In his early days when peers are still trying to figure out the difference between ex ante and ex post (which does not matter for many investors), he's meeting micro cap CEOs and telling them how to run their businesses (not sure how it was received LOL).
Some of the people around him, just by learning from him, broke into the industry at some of the very good firms / quickly rose to more senior positions.
Insane returns for the fund, for sure.
All I can say is that these prodigies raise a fund at a young age because of who they are, not because of when they were raising the capital.
Chase Coleman ?
This sound nothing like chase and much more like burry
I'm starting mine.
Run a quant strat for 2 years at a multistrat shop (<1B AUM ), by writing white papers 'reinvent' some event-driven strategy and vol arbitrage strategies and they let me have the ball and run with it. My strat went well and I was the major contributor to firm's PnL .
Carved out my strat last year (I was 27 last year) to run a small family office / prop shop.
Will try to raise capital but even if there's no LP I'm still good on my own.
I have come across many young fund guys in my career, most have started their fund in the last years. They are either in the crypto space or are entrepreneurs with many exits. Family offices are more rare, but also possible. It depends whether your own family is setting it up or whether external offices are pooling for that fund.
Generally speaking, I would say the entire financial space is experiencing a renaissance with the advent of the digitization of the industry.
Now they start VCs
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