GUEST COMMENT: Start-up Hedge Funds are NOT a viable career move

Fancy a job in a start-up hedge fund? The reasons seem compelling. It's sexy to work at a new shop with a hotshot manager who has spun out of one of the big names. A lot of large houses are still working hard to regain their high water mark above which they can charge investors performance fees again following 2008 & 2009's awful environment. These performance fees will ultimately determine your future bonuses. Clean slate = new Chelsea pad.

There are no one-way bets though. Don't be fooled into thinking that every new start-up is a massive success, despite news items about the wealth accrued to the founders of GLG GLG when they sold up to MAN Investments.

You'll have to be very, very good to get a piece of equity in the operating company. If your boss is entrepreneurial enough to set up his own firm, he'll be astute about giving away even a small bit of his nest-egg.

Be prepared to work for peanuts and do everything

Cattle Market Capital Partners anyone? When you turn up on day one, you'll likely be in a small, cramped office in an unfashionably cheap part of Mayfair. Just like the investments you'll be charged with analysing, your boss will be highly focussed on cash flow.

This means you may not have an assistant and you might find yourself juggling stationery orders with reading equity research. There will be precious little training, conference visits, or anything else that costs the fund money.

And this may go on for several years until you've established a track record of returning cash to investors in multiples of what they invested initially.

Beware flatulent colleagues

You'll need to get used to a very different environment from that of a large asset manager or a bank's trading floor. You're likely to be part of a very small team in an even smaller office space. Working long hours, you'd better be certain that you all have good chemistry. Even if this is true, just one case of chronic flatulence can make daily life a misery.

Senior colleagues will probably fall into one of two equally undesirable categories. Either they exited their previous job with a healthy pay packet, in which case their new venture is likely to be a vehicle for them to play as much golf as possible, and boast to their mates about their new little project (without being very motivated to make huge profits - why should they if they are already so rich that they never need to work again?).

Or even worse, they'll be young, gifted, unproven and intolerable to work for.

One friend of mine worked for an example of the latter who shouted at everyone, even after two hours of pushing weights first thing in the morning. His chair smelt of Red Bull, his breath smelt of Red Bull, he urinated pure Red Bull. It was a reminder to his cowering employers of his awesome presence even when he wasn't at his desk.

And when it all blows up...

Lastly, note the much higher chances of a new fund blowing up or otherwise abruptly shutting up shop. You might end up working for a vehicle for your seniors to simply cash in short term on the next asset class fad. Another friend of mine whose fund imploded spectacularly was left to answer the phones to angry investors whilst the fund's value plummeted to zero. Her bosses disappeared to their holiday homes on the Med - it had all gotten too much or them. Poor things.

The author is an anonymous banker who now works in a private equity fund.