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Investors feel confident when they know that a third-party intermediary platform is looking after their investments. The business risks are limited and controlled, making the institutional investment in a fund possible. Investors know that the platform won’t risk its other investor relationships when one small fund defaults.

If you outsource compliance, you can become an appointed representative (AR) within a few weeks and establish a regulated track record while waiting for the FCA. If you outsource IT and office infrastructure to an organization that is compliant with AIFMD and MiFID 11 outsource trading, you will minimize execution costs and save money and time on trading costs that affect your bottom line.

Risk systems, middle and back office, operational procedures, producing performance reports and detailed analysis can all be outsourced. Your IT should be private and cloud-based. Having it run by experts in the field will mean that regulatory stipulations are met, and efficiency is maximized. Managing technology is a profession and it’s much better to outsource this if you’re starting a new firm.

In-house seeder fund capacity and a good capital introduction team

Large prime brokers are often not able to find you the seed capital, despite their promises.  They often simply can’t justify the time and do not have the contacts for a new hedge fund.

A key part of your success will be to find in-house seeder fund capacity combined with a capital introduction team who focuses on emerging funds and works on a results basis. This team will already have established relationships with investors and understand what they require.

Prime Brokers  

Integrating with a specialized prime broker gives you the advantage of an aggregated platform serving multiple smaller hedge funds. This is important at a time when small funds are struggling to gain access to global prime brokers. Basel 111 forces prime brokers to try and shore up their balance sheets so they may find they need to drop smaller clients who are just not profitable enough. Brexit has also had an effect and brokers who operate in the UK and Europe are able to obviate this effect.

Central to the services of a prime broker is custody of assets, access to financial and securities lending, execution of orders and portfolio reporting. A specialized prime broker has a platform bringing extensive offerings together that will help you to successfully establish and grow your fund