For investors, finding the right hedge fund can be a lot like dating. Which one matches your goals? Do your personalities connect? Is it worth investing time…and money?
Well, one start-up is trying to make the process easier by matching investors with the right hedge fund – think of it as a matchmaking website for those wanting top returns.
"Really this is for…institutional investors, pretty sophisticated investors that are spending a lot of time, effort and capital to find these funds," Sam Hocking, CEO of iMatchative, told CNBC on Friday.
The San Francisco based company uses a whole host of metrics to work, from traditional sources such as regulatory filings, to algorithms created by behavioural finance experts to determine the compatibility between investors and funds. The product, called ALTX, has over 16,000 funds on its website.
iMatchative raised $20 million last year in a funding round and has Mexican telecoms billionaire Carlos Slim as one its backers.
Hedge funds have struggled in recent years with volatile performance and a bad reputation and face competition from start-ups, which aim to both help and challenge the hedge fund industry. HedgeZ is another platform that lets investors seek out the best hedge funds for them, underlining the growing number of so-called fintech companies in the space.
Hocking, who previously held positions within investment banking at BNP Paribas and Bank of America, said the company did not want to hire bankers to build the technology. Instead he told CNBC the company tapped ex-employees of Google and PayPal to work for the company.
"The way that I thought about solving this problem was not to take traditional people that have worked at banks…what I really wanted to do was do a multi-disciplinary approach, I wanted to take technologists from Silicon Valley," Hocking said.