I don't understand, if it is being backed by a few midsize hedge funds, why is there a liquidity problem? Maybe our definition of "backed" is different. To me, "backed" means they put up money and not just promises of future business. Evaluate promises to a startup as having minimal value.
When you say MM shop for hedge funds.... Is this new shop an authentic MM? If so, is it associated with the main exchange of its market? If the Startup has concerns about short-term liquidity, I don't see how an exchange can make the shop a market maker, even if they do pay the fee. MM are supposed to provide liquidity. Or am I missing the definition of MM and it's not Market Maker?
Who told you this? The Key people or the clients? If it's the Key people, does it make sense? Will these clients really place orders? Options are much more oriented towards best value rather than relationship. How is the Startup going to manage this? Is it the expertise of it's Key People? If so, do they have, or are they going to have, the same access to the Exchanges that they had previously so they will have the same information they had previously when creating their reputations.
Everything eventually has to be cleared through exchanges. There's little anonymity in block trading options (unlike equity) so why would they use the Startup instead of going through an existing Options company or the MM of the exchange?
This problem of enough liquidity to stay afloat long-term sounds like the Startup is not adequately capitalized. Is it going to take positions?
WHY is their track record very impressive? Is it because they had access to lots of resources (peon traders) so they could keep tabs on several parts of the market at once? Was it a trading tool that they themselves designed/developed to take advantage of market opportunities. Why is very key here.
With the business plan and your market knowledge (I'm assuming this is in the same market that you are in) you should be able to make some sort of guess!!! If not, then I would really recommend staying where you are and learning more!
But damn, if you can't make some sort of an assessment from the business plan, then joining that Company is a pure leap of faith. A business plan is suppose to SELL you on it's viability. If you can't understand it, how can you have faith in the folks who WROTE it?
Hell, it isn't even my business, and I can come up with same damn good questions that would help me evaluate their business plan. At the end of the day, the Startup has to bring some sort of value added to the customer. Just what is that value added and does it make sense? A lot of things you have said so far does not make sense.
On a side note, I thought you were a standard IB Analyst rather than one involved in trading. The people who I hang around and work on the floor (or with trading in general) tend to call themselves traders, while people in the relationship side call themselves IB. Some of the thoughts I mentioned regarding Analyst to Associate don't apply as much to Traders (if at all).
Andy:
In traditional IB good head hunters are few and far between in my opinion as everyone in the business is constantly networking with everyone else during business hours and everyone knows each other's business (nosy bastards!). I can see where headhunters would play a much more valuable role with quants and traders. Thanks for giving an answer forwarding discussion.
Reputation amongst peers is a very strong indication of character and ability. Question is how to go about and get that information. In traditional IB, there's a deal list which has the contact info the client, all the banks involved, lawyers, accountants etc... You can call those people (or have others call these people) and get info on folks (Ask a friend to call a previous client and ask if they would do business with so and so). After you've participated in a few deals, you'll develop your own contacts and you can use those to ask direct questions or have them ask direct questions for you.
Young traders that I know almost always go out after work (in NYC. Don't know about Chicago or anywhere else). This is where your networking skills come in, especially when you meet folks from other firms. I know the young folks are especially helpful of one another. If you went to a top school, your alumni's should be particularly helpful!
I've rambled enough and am probably signing off on this thread.
Good luck to you however you decide.
g-
gwkenny
