How To Start A Hedge Fund: Yaron Naymark & @madThunderdome

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Oct 29, 2021

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ADVICE

Bootstrap Only If You Can Weather The Runway

Bootstrap only if you can cover living expenses and fund startup burn for multiple years.
Yaron Naymark bootstrapped OneMain with low seven-figure AUM, ~$15k legal start cost, and ~ $15k/yr admin+audit run-rate to prove a track record first.

ADVICE

Pay For Admin And A Trusted Auditor Early

Prioritise an administrator and a reputable auditor even when small; they preserve track record credibility and ease LP onboarding.
Yaron paid ~ $500/mo for admin initially and ~$10k/yr for audit with Spicer Jeffreys as an emerging manager auditor.

ADVICE

Expect People Costs To Dominate Institutional Budgets

Launching institutional requires upfront people and brand-name service providers; staffing is the largest cost.
MadThunderdome started with two analysts plus COO/CFO and cites PB/IT/compliance/audit line items (audit ~ $100k/yr, ACA ~ $80k/yr).

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Hey guys! Today is all about how to start a Hedge Fund and we have two amazing guests Yaron Naymark founder of 1 Main Capital and the anonymous twitter account @MadThunderdome to tell us all about it. Yaron Natymark shares his experience on bootstrapping a hedge fund while @MadThunderdome shares his experience on launching his hedge fund at an institutional level.

Here is the time-stamp of the conversation:

[0:30] Introduction
[2:20] Yaron Naymark founder of 1 Main Capital: Bootstrapping a Hedge-fund
[8:50] Thunderdome Capital: Launching a Hedge Fund at Scale.
[18:20] How to differentiate your fund?
[24:20] Essential costs when bootstrapping a Hedge Fund.
[29:00] Non-Essential costs when launching Hedge Fund at Scale.
[32:00] Twitter Q&A: How to Balance Amount of Capital vs Terms of that Capital?
[43:00] Twitter Q&A: How to find ideas?
[47:38] Twitter Q&A: Differences running your own money and your fund’s money?
[1:00:00] Twitter Spaces Q&A: Biggest mistakes people make?
[1:05:00] Twitter Spaces Q&A: Fund Size is an enemy of returns?
[1:12:00] Twitter Spaces Q&A: Fee Structure and Operating Expenses per annum?

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This episode is brought to you by MIT Investment Management Company -- also known as MITIMCo, the investment office of MIT. Each year, MITIMCo invests with a handful of new emerging managers who it believes can earn exceptional long-term returns in support of MIT's mission. In order to help the emerging manager community more broadly, they created emergingmanagers.org, a website for emerging manager stockpickers.

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