I was reading parts of the previous thread regarding hedge fund startups. I would just like to raise a question, most specifically targeted at Mr. Bright, regarding his position on people starting hedge funds vs joining prop shops. What's the difference exactly between starting a 40M fund (minimal) with 20% fees, and being given 10M in capital to trade on by a prop shop with 80% profits? Bright seems to say it is never of any use to start hedge funds. Yet, it seems to me that his business model is even more questionnable. On one side, you have hedge funds with usually trusted managers with specific strategies and low agency risk, hence the high capital concentration and the low incentive for extreme performance. On the other side, you have prop shops which provide leverage to untrusted traders with no specific strategies and high agency risk, hence the high diversification and high incentive for a few highly performing traders. In this case, what is the benefit for someone with a reputation and tangible strategies to go in a prop shop? And finally, if someone has no strategies nor reputation, but the potential to make lots of money, why not go for a bank?