Goldman Sachs Hedge Funds
Goldman Sachs Reportedly Looking to Seed Hedge Funds
Goldman Sachs is making another step into the hedge fund industry by bankrolling a few hedge funds. The bank is reportedly trying to compete with Blackstone Group LP in seeding hedge funds. For the last year Goldman has been trying to seed more hedge funds after shutting a fund that year.
The bank has spent the past year trying to attract clients for a seeding fund, which provides managers with startup investing capital in exchange for a cut of their fees, said the people, who asked not to be identified because the effort is private. Blackstone recently raised $2.4 billion for its second seeding fund, the industry's biggest.
Reservoir Capital Group, Larch Lane Advisors LLC and PineBridge Investments LLC also are marketing new funds, saying it's a good time to back startups because after the financial crisis investors are reluctant to trust even talented traders going out on their own. Goldman Sachs shut a fund in 2008, underscoring that betting on new managers can be tricky even for one of Wall Street's savviest firms.
"Seeding isn't an easy-money business," said Alexis Graham, co-founder of Acceleration Capital Group, which works with seed investors. "There are only a small percentage of people out there who can consistently outperform, build a business and scale assets."
About half of the 100 or so firms that financed startups before 2008 have curtailed their investing or quit the industry, Graham said. Reasons for the shakeout include poor manager selection and hard-to-navigate financial markets. Source
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