2. As a potential investor of seed capital, what are my advantages in investing with a start up hedge fund's inception? Isn't it prudent to wait until the manager has a track record before investing with them?
A1: Hedge Fund Launch, LLC does not perform due diligence on hedge fund managers that choose to list their hedge funds in the database. The managers are queried for certain information during the registration process and the results from this are placed in the database.
Q2: As a potential provider of seed capital, what are my advantages in investing with a start up hedge fund at its inception? Isn't it prudent to wait until the manager has a track record before investing with them?
A2: Seed capital investments in hedge funds offer several advantages including the possibility of an equity stake in the ongoing operations of the fund, capacity rights, fee discounts/rebates, and statistically proven out performance associated with the formative years of a new hedge fund operation.
While investing in a hedge fund with a track record may offer perceived safety, there is still no guarantee that the fund will be a success. Furthermore, funds with longer, successful track records are limited in capacity, tend to have higher fees, and typically offer unfavorable liquidity provisions. Additionally, research has shown that hedge fund managers further along in their life cycle, and with limited or no capacity, are apt to experience a leveling off and/or decline in performance.
A3: Hedge Fund Launch does not provide consulting services to investors. We strongly suggest that each investor find a deal that best suits their specific objectives and constraints.
A4: The basic structure of a seed capital investment in a hedge fund is similar to the structure of a venture capital investment. As such, there is a risk of 100% capital loss. This risk, however, also exists in a plain-vanilla limited partnership interest in an established hedge fund, without equity kickers (e.g., Maricopa, Manhattan Fund, etc.).
A5: Hedge Fund Launch LLC does not offer consulting services to investors.
A6: Yes. One of Hedge Fund Launch, LLC’s new services will be a database of start up and emerging hedge funds. We will be announcing this in the near future.
A7: Yes, we license our database of start up hedge funds. Please click on the following link to learn more. . . .