wilmott.com

I have strated seeking seed capital for two quant systems I have developed.What are ranges for compensation as % of revenue to the HF:1) if capital is proprietary to HF?2) if capital is from client?ThanksCMPT

I have heard 5-15% of PL as compensation range (so, if the hedge fund has 20% performance fee, it would be 25-75% of HF revenue). This is when capital is from client. When it's proprietary, you may see higher numbers. Let's see what experts have to say about this.

The, any, % is only one leg of the story. There are more issues such as the when your compensation is payable...

Does anyone here know what is a typical % payout deal at a hedge fund incubator like Millennium? Is there trading commish beyond exchange costs? Do they pay any base or "advance"? Once you enter a deal, do you still own software that you write? How/which cost are allocated to the trading book? ** I hope this isn't considered hijacking the post. I think this info is probably 100% relevant to the original poster's question as well.

traderdeluxe, i'd be happy to share some recent millennium offer structures with you if you PM me (i'm a HH, by the way). to answer CMPT's original question as simply as possible:1) when capital is proprietary to HF, such as founder's capital, 50% payouts are the high end of the range for the most in-demand P&L generators (think 9-figure recent annual P&Ls, stature in well-respected group, guys who're approached / poached). that's primarily for high-frequency stuff nowadays, though. this would not be available to a strategy with '6-12 months of live data', see parentheses. a more common deal is 25-40% of your P&L structured as revshare, incubated on someone else's platform, with the scale linked to realized sharpe on a trailing quarterly basis. 2) within a conventional HF structure, if 2/20 LP, 15% is usually negotiable at the higher end. (as jurowilmott11 said, 75% of the firm's incentive, no exposure to management fee). rarely, some firms will allocate to you on an external basis as a subadvisor and pay you 1% on the face of the allocation. in places where incentive is north of 30, 20% deals are cut often enough. if you're interested in a possible seed-capital introduction or two, feel free to reach out directly. philip

My PM makes around 40% of the Pnl as his share. He has very little capital; he built the strategy from scratch.

Is it fair enough to say that in a hedge fund you generally have access to more capital at a smaller payout, while at a prop group (with private money) you would probably have less capital at a higher payout?

yes, with very, very few exceptions.