Capital introduction is the process of a third party introducing a investor or investment group money manager. Many times an investment fund is started because the group has some information or market insight based advantage and believes they can profit from beginning to manage other people's money. To successfuly do this they not only have to apply their original investment ideas but they need to raise their assets to a level that can support the operations of their business. This can be challenging in a market with 14,000 competitors when your whole career has been focused on investment money and not raising it.
Hedge fund capital introduction has rapidly grown over the past seven years. Many hedge funds are facing increasingly stringent institutional investment requirements and more competition among themselves as advisory firms continue to merge and strengthen their leverage over management fees.