[sbaqai]

This makes a lot of sense. Investing seems to be a specialized skill, and finding talent isn't the same as hiring "generally bright people" (the top ivy league kids).

I think I'm paraphrasing Burry, who said if any one school had figured out how to pump out great investors, it would be the most expensive school in the world.

I really hope other industries consider this type of approach, cherry picking standout/non-traditional talent, that independently build some type of track record. Actually, I believe YouTube eventually hired the student who created instant, so it might already be happening.

Do you know how things look on the operational side? For a fund with $1M AUM, how much of the costs are legal or for getting the business up and running? It would be interesting to see a breakdown of the process involved in starting a hedge fund and how similar it might be to starting a startup YC-style.

[jakarta]

It depends on how much back office work you want to do yourself. A lot of young fund managers get enamored by the prospect of being able to spend all their time looking for investments that they forget about the administrative work required to run a fund.

A friend runs a $3M fund where audit, legal, book-keeping/accounting costs about 0.8% of assets. This guy does A LOT of the back office work himself. You can actually hire other firms to do stuff like cut checks, client contact, etc. It just raises your costs.

Also, what some young guys will do is sell a percentage of the hedge fund business up front, in order to secure capital that will pay for initial start up costs, compliance, a living salary for the first year. So maybe you will sell 20-30% of equity in the fund up front to get that.