Hedge funds are launching leaner and faster than ever

• The rise of separately managed accounts is enabling faster, leaner hedge fund launches.
• SMAs, outsourcing, and improved technology help small hedge funds scale fast.
• Funds can launch with a single employee, like Bayhunt Capital, but credibility remains essential.

A decade ago, a one-person hedge fund firm would've sounded far-fetched — science fiction for managers, and a due diligence horror story for allocators.

Back then, institutional investors wanted to see a real back office — finance, operations, compliance — and the expensive technology necessary to run sophisticated risk, trading, and reporting. Even seasoned portfolio managers typically needed a team before big investors would buy in.

But the future is here for portfolio managers, and allocators are seeing dollar signs.

Just ask Ben Williams, who launched Bayhunt Capital in 2024 as the founder, chief investment officer, and sole employee. The firm, based in Marin County, California, focuses on real estate stocks and manages $360 million, including leverage, for allocators through individual investment portfolios, known in the industry as separately managed accounts.

"It's always been something in the back of my mind that I wanted to do — have my own business," Williams told Business Insider. Now about a year into live trading, he said he's on the cusp of onboarding his first employee, an investment analyst.

Even five years ago, Williams couldn't have imagined some of the industry shifts that made it possible to start a company this way.

Leaner, faster launches like Bayhunt's are one of the knock-on effects of the booming popularity of separately managed accounts. As allocators increasingly lean into SMAs for the transparency and control they provide, managers have been able to launch with a smaller headcount — and in some cases, without a commingled fund at all. At the same time, cloud-based tech systems and outsourced service providers have made it possible to rent much of the infrastructure that used to require an in-house build.

Hedge funds, which have had a generational run of returns in recent years, are now the clear favorite among investors — and a growing number of portfolio managers like Williams are concluding there's never been a better time to take the plunge and pursue the dream of running their own fund.

SS&C, a top software and service provider to hedge funds, has seen a marked uptick in adoption of its cloud-based investment platform geared toward emerging managers. The number of clients using the platform, called Eze Eclipse, has grown more than 25% since 2024, with 70 new joiners in 2025, the company told Business Insider, attributing the acceleration in part to firms streamlining operations for SMAs.

A whole cottage industry of service providers is popping up and scrambling to meet the needs of these upstart firms. IIP Services launched in 2024 with a focus on the burgeoning SMA market. With more managers launching at smaller sizes, IIP saw an opportunity to provide a soup-to-nuts product for the non-investment aspects of the business.

Semi Gogliormella, a partner at IIP Services who has held senior operations and compliance roles at firms including WorldQuant and Boulder Hill, says many PMs are realizing that the combined power of the SMA market and improved technology has significantly reduced the time to get a firm off the ground.

He said he has seen managers up and running with new SMA capital within weeks of signing an investment management agreement, though he cautioned that it isn't the norm.

"Onboarding and going live gets truncated significantly," Gogliormella said.

The Substack effect, but for portfolio managers

The meteoric growth this decade of multistrategy hedge funds like Citadel, Millennium, and Point72, and the ensuing war for talent, has created more opportunities than ever for portfolio managers to gain experience and a taste of running their own business. A major allure of these firms is that the platform handles operational headaches and red tape, leaving investors to focus on markets, supported by world-class technology and trading systems.

Replicating that experience outside of the confines of a pod shop wasn't realistic.

Superstars could spin out and raise the capital to build and hire — a lengthy endeavor — but for most managers, a "career change" meant hopping to another multistrat.

It's not that small, stand-alone money managers didn't previously exist. It's that now they can attract institutional capital — and the economics that come with it — and more easily recreate the systems used by large funds, offering a career path many might not otherwise have considered.

It's not unlike how Substack and its competitors offered better professional tools for writers to self-publish, distribute, and monetize their work.

"A lot of these managers, they're incubating in these multistrats and have a good pedigrees when they spin out," said James Griffin, global head of sales for SS&C wealth and investment technology group. "Their expectations are that they're going to get the same bells and whistles that they've had at these big institutions."

Multistrats have become significant SMA allocators in their own right, and some offer access to their in-house tools and systems as an inducement or in exchange for a fee discount, industry sources said.

But for those without that option — or who are looking for more independence and fewer strings — managers with less than $100 million in capital can rent the same tech stack as some multibillion-dollar pod shops, Griffin said, noting that his firm provides software to some of the industry's largest funds.

Veteran systematic portfolio managers Matt Gormley and Matt Isherwood began looking to set up their own shop about five years ago, when the SMA rush was starting to take shape. They went in-house at Walleye, leaving two years later to launch Brabus Capital. Like Bayhunt, London-based Brabus started small and exclusively with SMA capital, but it is growing and is in the process of bringing on staff for key investor relations and technology roles.

"One of the challenges for systematic investing is the barriers to entry are high, which is why quants tend to be tied up in multistrats," Gormley said.

The duo started exploring options to outsource components of the business and realized the landscape had changed significantly since 2020. Abundant SMA capital meant they could start running money faster. They could also rent state-of-the-art technology, compliance and operational infrastructure, cybersecurity, and hire someone to manage relationships with prime and execution brokers.

Like Williams, they signed on with IIP, which aims to save managers time and money getting off the ground by purchasing institutional-grade software — order, execution, and portfolio management systems — at wholesale prices and integrating them into a cohesive, ready-to-use system.

"It's enabled us to get scale from day one that would typically take 12 to 18 months to build if you were recreating the multistrat setup from scratch," Gormley said.

You can rent infrastructure; you can't rent credibility

Don't let the small headcounts — and the relative ease of getting these firms off the ground — fool you. This isn't trading from your couch in your pajamas, and cheaper technology doesn't mean launching a hedge fund is now fair game for anyone.

Experience, talent, and credibility are still prerequisites.

Both Bayhunt and Brabus said their comfort outsourcing non-investment work came from years inside institutional platforms, gaining exposure to the less glamorous but nevertheless critical functions of hedge fund — risk, operations, controls, and due diligence. Williams, who liaised with several risk managers at top-tier multistrats, said that while the technology is cheaper and more available than it was a decade ago, "a person needs to have a considerable amount of experience" to understand the risk math and to have the confidence to strike out alone.

Brabus' founders put it more bluntly: you can outsource the plumbing, but you can't outsource knowing whether it's working — and allocators still aren't writing meaningful checks without a credible track record and an operation that can survive institutional due diligence.

"Even with high-quality outsourced partners, running a hedge fund business is a big lift if you don't understand what goes on downstream from your investment process," Isherwood said.