LONDON (Reuters) – Reuters) – Start-up hedge funds face a harder time getting up and running as investors become more demanding and prime brokers squeeze smaller players during the credit crisis.
After a golden age when two traders with a terminal could set up shop and command lucrative fees, there is a growing perception that bigger is now safer. Some high-profile fund casualties also have made many investors choosier.
London’s prestigious Mayfair and St James’s areas proved a honeypot for such start-ups.
“The investor base has become more discerning,” said Mark Kary, chief executive of Polar Capital. “When they see a start-up in the West End, they are more suspicious.”
Fund managers will have to put forward a stronger track record and credible strategy to have a fighting chance in the months to come.
“It’s definitely getting a lot tougher for the little guy,” said Odi Lahav, head of Moody’s European Alternative Investment Group.
