> The real money is at the top. The bond prospectus reveals that Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years. Among those there will be at least a handful of billionaires, even if no Jane Streeter appears on any rich lists.
Sounds like any other partnership. A few people at the top are providing the equity and getting a profit share, and the thousands under them are getting salaries.
Typically at such companies you have to be at the very top of the hierarchy to be able to buy in and get a slice of the profits. It is very unlikely that rank and file employees are able to participate, at least at a scale larger than, say, a Google employee buying some extra shares.
> $100k buy in at the hedgefund I know. Its a big figure for most but starting salaries, friends & family, and personal loans will get you there.
Surely this is a HN culture bubble? Very few people can borrow tens of thousands of dollars from family and friends to lend to a hedge fund. Not only would I be refused, I'd damage friendships by exposing the moral vacuum at my core.
It has more to do with the nature of the industry and firm. If your TC yearly is all cash and exceeds 500k, asking 100k of that as buy in is not too different from being granted stock options as an outcome. They could just reduce your TC by 100k one year and replace it with equity in the pool.
Being able to borrow that amount might be a bubble, but depending on the fund I don't think it would damage friendships at all. If you had access to the internal Renaissance fund for example I think your friends would be happy to get in on that.
Big Canadian bank I know had something like a requirement to own $450k of shares to be a board member. But they sliding scale exempted you for your first 5 years and gave you $90k in shares each year, so as long as number go up, there was no actual outlay.
For what it's worth, a friend of mine is a lawyer in a well-known hedge fund and he gets access to their funds too (funds that would not otherwise be accessible without making a substantially larger investment I believe).
I've no idea if they feel they need this or not. But I do know that if you want to buy a significant chunk of JS (which is the context of this) then you'll need to have a lot of money to do so.
They typical reason hedge funds set minimums (aside from regulatory restrictions) is that they don't like dealing with a ton of small investors. It's easier to deal with fewer, larger ones.
In contrast, if you're a prop shop that only accepts employee money, you're already dealing with your employees.
So there's no real reason for JS et al. to set large minimums, in contrast to non-prop hedge funds.
Rentech uses this model too. The equity-to-salary ratio of an employee increases the longer they remain at the firm. It's for incentivizing employees to stick with the firm in the long run such that they don't work for any other firms and become a competitor (especially true in trading given the small population of talents).
> The real money is at the top. The bond prospectus reveals that Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years. Among those there will be at least a handful of billionaires, even if no Jane Streeter appears on any rich lists.
Sounds like any other partnership. A few people at the top are providing the equity and getting a profit share, and the thousands under them are getting salaries.