Hedge Fund 2.0 – what’s the footprint of a next generation fund

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Paul Kedrosky commented that “hedge funds are the new software companies”. It’s certainly no stretch when applied to funds like DE Shaw. They have computer scientists beavering away on new algorithms to drive their investment methods. They opened up a VC arm (operates out of Apple’s old offices in Cupertino). But is this enough?

Should hedge funds expand their opportunism – the analogy is the Facebook “fund” that Accel is participating in. Would a hedge fund that allocates a small team and capital towards a Web 2.0 Platform “fund” clean up the space (given the alleged expansion of Google into opening up its platform the space will grow exponentially).

Should hedge funds invest even more into tech development – for example would a hedge fund with order of magnitude better machine learning algorithms be able to steal a march on competitors?

[Picture of Wall Street courtesy of Stuck in Customs]

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