There are two threshold issues everybody faces when they consider launching a hedge fund. The first is the decision to go out on their own and break free of the corporate ties that bind them; and the second is the choice of services providers to get their fund up and running. The answer to the first question has to come from within and while I have a lot to say about it, I will save that posting for another day. The second issue is one that will be addressed right here and now!
When you decide to launch, you need to pick three groups to help you get into business right away; the lawyer, the prime broker and the accountant. Each plays a significant role in the development and ongoing operation of the fund and therefore needs to be chosen with care. I suggest getting references for individuals at the recommended firms from friends, colleagues etc. As someone that people come to for advice on the subject, I try to remain neutral, although I do clearly have my favorites and many people have been known to pry the names of the firms and people I like out of me. Today however, I will not be doing so; instead, I am here to tell you that there are three things you need to keep in mind when you are looking for a service provider with whom to launch, build and grow your business. These are in no particular order as they all are very important:
You must like and respect the person and understand that the relationship is mutual,
The firm must have significant experience in the hedge fund industry and be well known and in turn respected by the hedge fund community.
The firm must have a good work ethic and be responsive to your questions, needs and wants during their engagement.
It is easy to achieve one and two, you will like them or not from the get go and you will know if they respect you as well from the start. To check on their experience all you have to do is ask around and talk to people; heck send me an email and I will tell you what I think. As for three, this is a hard one, because initially especially with the lawyers, you probably wont meet the person who is doing the work and therefore it might be hard to see just how hard they will work for you. What you need to do here is ask a lot of questions up front and try to gauge their responsiveness accordingly. Remember at all times that you are the client and that they are not doing you a favor, they are being paid for their work.
