Issue #30

If you are launching a new hedge fund and can raise $100 million, you're struggling because if you charge 1.5% in management fees, which amounts to approximately $1.5 million a year, operations, risk, and compliance people will take up half of that. So, stand-alone hedge funds have a cottage industry problem. They are trying to do too much.

Instead, an option is to work with a platform.

We are a platform that allows traders to focus while taking care of all of the infrastructure and operational concerns. Our Fundbox.ai solution benefits from economies of scale, allowing emerging managers to start with around $5 million in AUM or even less. That amount is sufficient for it to be cost-effective for them and to get started.

Otherwise, standalone hedge funds need at least $50 million in AUM, and even then they struggle for a long time. What we're trying to do is help build this ecosystem for emerging managers so that they can succeed.

A better hedge fund industry needs dynamic creation, testing, and validation of new managers. Right now, it's failing.

I saw a report last month stating that Asia-Pacific has had the lowest number of hedge fund launches since the global financial crisis 18 years ago. It’s just getting increasingly difficult.

So you either have a couple of massive launches, or otherwise, the industry is—in a sense—broken. It has just not moved forward; it's not using technology the way it ought to use technology.

Time for change.