How to Start a Hedge Fund: Interview with Ted Seides

Have you ever wondered what it would be like to run a hedge fund?  Hedge funds are both glamorized and villainized by both popular culture in TV series like “Billions” and on the political and legal arena by recent high profile lawsuits by activist investors like Bill Ackman and Carl Icahn.  However, for most hedge fund start-ups, the reality is far from glamorous and requires a huge amount of work and unwavering commitment.  Nancy Davis, the CIO and founder of Quadrant compared starting a hedge fund to “a very expensive hobby.”  Hedge fund start-up founders should expect to put a significant amount of personal financial capital as well as sweat equity into the business for at least a year before seeing any return on their investment. Most hedge funds are small and have a hard time scaling: according to Hedge Fund Intelligence, only 305 hedge funds out of the 7,500 comprising the universe manage more than $1 billion.  In other words, it no longer takes two guys and a shingle open shop. The high-level of competition, regulatory scrutiny and investor due diligence is actually good for investors and for the few committed hedge fund entrepreneurs who are passionate about markets and building a business.