May

13

Start Up Managers: If at First You Don’t Succeed …

May 13, 2008 |

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An interesting article in yesterday’s Wall Street Journal pointed out that some hedge fund managers who start up and fail have an easier time raising capital than those who never attract such attention.  In particular, the article highlights the rise and fall of Jeff Larson and his Sowood Capital Management firm.

So, let me get this straight … there is an inverse relationship between how big my fund blow up is and how much easier it is to raise capital for a new start up fund. 

And all the start up managers that are grinding it out day to day, week to week — what about them?  Well, obviously they would be well served to spend their time on destroying their funds, getting all sort of press about it and then, once they finish their “pennance”, they can return to start up a new fund and raise even more money.

Yeah, okay. Sure.  Its just like golf.  Just play a mulligan.  We advise otherwise.  Far better to grind it out and get good returns for your investors.  It will pay off for you and your investors in the end.

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Comments

3 Comments so far

  1. Tim Ramsey on May 13, 2008 4:50 pm

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

  2. Tom Augenthaler on May 15, 2008 7:41 pm

    Thanks for your comments, Tim!

  3. Joshua on January 30, 2009 9:37 pm

    Tom, Surely it would be harder to raise capital in the future with a new hedge fund if the old one blew up. Sure you’ll have a database of contacts and a different name, but they’ll surely put 2 and 2 together and realise its owned by the same person?

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