What is perhaps different for today’s start-up manager as compared to five years ago is the need to launch with greater amounts of capital. Moreover, they are doing so with a greater awareness of the need to adopt best practices from day one to stand a chance of attracting institutional dollars.
This trend is playing into the hands of firms like Anchin Block & Anchin.
“Many managers who don’t have to register with the SEC from the outset (provided they have less than USD150m of gross assets) are adopting a best practice approach and running their business as if they were already under SEC scrutiny,” says Jeffrey Rosenthal (pictured), CPA, Partner-in-Charge of Anchin’s Financial Services Group.
Anchin’s Financial Services Group launched more than 35 years ago and includes ten partners and more than 50 dedicated professionals. It works with over 350 hedge funds, mutual funds, private equity funds, funds-of-funds, master-feeder funds, broker/dealers and family offices. Financial Services is Anchin’s largest industry practice.
“We are a lot more hands on than some of the larger firms. Of course the Big Four, by their very nature, are hugely important to the hedge fund community, but we like to think of ourselves as a viable alternative that is able to provide clients with a highly personalised touch,” says Rosenthal.
That message appears to be resonating. Since the start of 2014 Anchin has brought on six new start-up managers with a good number still in the pipeline.
“It’s been a really busy couple of months for the firm. I’ve met with many start-up managers, all looking to launch this year,” confirms Rosenthal.
Managers who have strong internal policies and procedures in place are more likely to catch and keep the attention of investors. This support in adopting best practices is something that Rosenthal and his team offer from the get-go. At the end of the day, potential investors want reassurance that a manager is serious about growing their business over 12, 24, 36 months.
“After all, the ultimate goal of any ambitious manager has to be to register with the SEC and grow their assets. Most managers want to grow beyond their USD25mn launch size. We’re looking to work with funds focused on their own growth. The more familiar they are with best practices, the more familiar it becomes for them to make that transition (to registering with the SEC).
“We are good partners for start-ups. We help them understand all the processes they need to undertake and ultimately decide whether they truly want to launch a hedge fund. It’s a matter of us making sure they are well informed,” says Rosenthal.
Under the gaze of global regulators, it is vital that managers establish a clear audit trail and document completely the way their hedge fund operates. If the SEC or FCA were to come knocking on their door, managers have to be able to evidence why certain questions were answered in a certain way in their regulatory filings.
“We want to push managers in the right direction; we look at their policies and procedures and make sure that they are structured accordingly. It makes our auditing process easier at the end of the day,” continues Rosenthal.
On winning the Hedgeweek USA award for the third year in a row, Rosenthal says: “We appreciate the recognition from our clients and friends in the industry. Our continued commitment and dedication truly pays off.”