As another year draws to a close, emerging hedge fund managers wrestle with how to grow their business to the next level,includinghow to survive another year of cutthroat competition for attracting investors. While the answers to this riddle can be numerous and complex, I thought it might be interesting to survey a cross section of hedge fund professionals on just one question: What would be your top priority in budgeting working capital for emerging managers who need to spend wisely in 2016? Below arethe most popular answers.

INFRASTRUCTURE:This includes hiring the right service providers and core team members from the outset. Investors want to see solid investment and operational processes at every level of AUM, so the capital allocation to infrastructure is essential to long-term growth opportunities for all managers.

DISTRIBUTION CHANNELS: This means having the access and expertise in business development present either within the firm or through third party representation, but also means targeting the right investor base relative to the firm’s size and strategy. Too many emerging managers begin their sales efforts at the institutional level, despite their asset base being too small to attract this audience, and precious working capital is lost in the first year or two.

STAFFING: Identifying key talent and timing the acquisition of these individuals are critical to long-term success. Most of the time, managers will need to consider giving up some equity in the firm to this core team. Research, compliance, and operations are essential functions that must be right from the outset of a fund launch.

CONTROLS: This pertains to risk management and compliance issues. Besides the investment management due diligence focus on risk, inves......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.