As Tolstoy said, “every successful start up hedge fund is alike; every unsuccessful start up fund is unsuccessful in its own way.” Brief story on my own experience - please add yours here! A brief 🧵

12 years ago, I joined a long/short equity fund seeded by a larger fund with a different strategy. I was the second analyst, joined a year after launch, and we had about 120m of assets, 100m of which was from the “mothership”

The PMs came from an old school multistrat fund - one was very young and had managed a 1b+ sector book. His number 2 was his analyst there. They had a good year out the gate. They wanted to scale to $1b and seemed to have a chance of doing it.

Ultimately about 2 years after I joined they lost their initial seed but replaced it with another. 3 years after that they lost that seed, sued them, and lost that case. The two PMs are out of the industry and the first analyst is out as well.

There were many issues. The PMs were a bit lazy and unethical. One of them was a good stock picker, the other was neither a good stock picker nor fund manager. Returns were mediocre. I left after about 1.5yrs to join another start up that worked.

Moral of the story - I joined because I thought I could add value. In retrospect you have to go to a fund you believe will have good returns and with a strategy you believe in, not one that you think can raise money. Talent and fit ultimately wins out.

Not enough people talk about their failures. What’s your failed fund story?