UBS accused of providing Doritos to hedge funds at “half the market rate”
Jul 9th, 2007 | Filed under: Hedge Fund Industry Trends
In an effort to create more mass hysteria around hedge funds, the media has turned its sights back toward hedge fund incubators (a.k.a. “hedge fund hotels”). You may remember a posting about this back in January (U.S. regulators grow alarmed over ‘hedge fund hotels’). Back then the International Herald Tribune described hedge fund hotels as:
“Just as venture capitalists and others during the technology boom created incubators to help entrepreneurs start businesses without the headaches of finding real estate and office support, so a few big investment banks are offering young ambitious hedge fund traders a temporary home, complete with receptionists, espresso machines and consultants to help manage their information systems.
“As the technology incubators sought to oversee the birth of the next Netscape, so these hedge fund hotels hope that the small hedge funds may some day become big clients of the bank.”
The basic idea makes perfect sense. As we discussed yesterday, software start-ups and hedge fund start-ups have a lot in common. They both rely heavily on intellectual and human capital, they face low barriers to entry, have similar levels of operational complexity, and are highly scalable. We know of several non-bank-owned hedge fund incubators that proudly call themselves “hedge fund hotels”.
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