I just started a hedge fund, and looking for investors to raise capital. I want the Elite family to give me some advice on how to raise capital, any warnings, and the basic understanding of the overall market. I'd love to hear back, ANY opinion is useful.
I would suggest adding AUM very slowly. I have seen traders with great track records, and yet they grew AUM too fast and game over.
Prove to your investors that you have major skin in the game (& I hope you do, at least 50% of your personal net worth, perhaps?). Prove to your investors that you will have their capital protected against major drawdowns or “drawups” (if short) or against any catastrophic market event(s). In other words, show how you hedge their funds..... Be honest. Be ethical. Be straightforward. Don’t be a bullsh*tter.
This is quoted a bunch in Market Wizards. One of their biggest regrets is taking on too much too quickly.
I have experience with helping some of my customers to turn into professionals CTAs. These are the thing that no one shares you with you before you manage capital for others: 1) There is a significant shift in psychology when you trade OPM. 2) You have to learn how to trading substantial capital in terms of scaling and risk management. 3) Quite often, those who give you the money manage you, especially during drawdowns. 4) You need an organized back office for clearing, fees, and statements.
Documented performance and you may, if you have the scale or eventually achieve scale, separate the money-raising from the trading. Don't let anyone talk you out of your dream.
Use IB friends and family account. You can link 15 accounts and do not have to pay to register as money stays in individual names.