FundRobot » Investment Banking » How much money would I need to start an investment firm?

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Old   #1 (permalink)
 
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Default money would i need to start an investment firm

Though I may be young (17), I wanna know how much money it would support and build an investment firm. I want to start writing a business plan for it so that as soon as I get a hold of funds I can get straight to work.

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Default money would i need to start an investment firm

Depends what kind of investment fund. You can put together a simple commodity pool in an afternoon with almost no money (a few thousand bucks for incidentals). A mutual fund is about $150K. A hedge fund is about $100K. But those figures depend deeply on what you want to do and what you are calling expenses and how much legal work you can do yourself. I doubt that there are many 17 year olds who can write offering memoranda, subscription agreements, organize offshore feeder funds, etc and I doubt there are many people who are willing to talk to you about it.
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Default money would i need to start an investment firm

You failed to state what typ of investment firm you want to start, so before you can write any type of business plan you have to decide what type of firm you are trying to build.

Do you want to be a registered brokerage firm, the cost will vary depending on your operations.
Cost will be dependent on registrations and they type of business you want to do, they will run anywhere from $50,000 for a sole proprietorship clearing on a fully disclosed basis and not handling any customer securities and/or money. to a full service broker/dealer clearing fuly disclosed will cost about $225,000 in net capital to start with operating expense of another $225,000
If you want to process the transactions yourself you can add another $100,000 in startup with an additional $500,000 in opersating expense

If you want to be a dealer with exchange membership you're looking at $500,000 in start up and another $100,000 in operating expenses. If you want to be a trader/market maker/specialist you will need about $250,000 (plus exchange membership) with another $250,000 for operations.

If you want to be a mutual fund or a hedge company you need at least $100,000 to strat with and another $75,000 in operating cost, as long as you clear all transactions fully disclosed.

You can start an Investment bankiing fund with little or no capital ($50,000 to start) however, you must have very strong underwriting and syndicate contacts. If you do not have a track record in investing banking you'll never get any business and you'll be wasting everyone's time and efforts

Before you even try to write a business plan you must know what type of firm you are addressing. You have to learn what the industry is all about.
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