Original Work Proposal

Proposal: Startup incubator fund

Introduction and Purpose:

In the world of asset management, there is a consistent sentiment that the most valuable thing
someone can have is experience. Though learning about different investment strategies, allocation
methods, and hedging techniques is valuable, the best way to truly absorb the information is by applying
what you learned in an actual portfolio. For this reason, our proposal for the original work project is to
create a startup incubator fund in which we apply the asset management skills we have learned over the
years. Doing this will allow us to explore a certain niche and gain the experience needed in asset
management at a very early age, giving us an edge in the field.

Our main objective in this project is to be able to apply our knowledge in an efficient way.
Obviously starting a hedge fund is unfeasible at our current age and experience, but we believe that an
incubator fund would be an excellent way for us to be able to apply our knowledge at a much smaller
scale. Our original work will likely be focused on three main aspects: establishing the fund, creating an
investment strategy, and conducting analysis on instruments. Establishing the fund will likely require
knowledge of certain legal procedures, include startup costs, and involve raising capital. Creating an
investment strategy will likely require spotting a specialty niche, establishing an investment philosophy,
and deciding what instruments to invest in. Conducting analysis on instruments entails gaining an
in-depth knowledge on fundamental, technical, and macro analysis to select specific investment prospects.
All of these will allow us to effectively gain experience in the field in asset management.

Review of Skills and Research:

Our original work will require an extensive amount of skill, knowledge, and research. Though we
possess a decent amount of information right now, we will need to learn a lot more if we want to truly
execute and succeed in this project.

Our first and most important knowledge will have to be in the investment strategy of the fund
itself. This will be Eshaan’s responsibility. He will have to properly learn the ins and outs of discovering
potential investments, asset allocation, and hedging. We cannot expect to run a fund with an incomplete
level of knowledge in these areas, so he will need to be willing to devote an extensive amount of time
learning about these topics. Along with this, he will need to do extensive market research to discover a
specific niche to have our fund capitalize on. Obviously, trying to capitalize on general large-cap equities
would not be too efficient due to the high level of market activity on those stocks. Finding this specific
niche will likely be the hardest part of this project.

The second point of research which we are going to have to conduct is on the specific
mechanisms of the fund. This will also be Eshaan’s responsibility. He will need to learn how exactly you
create an investment account for a combined fund, and how the profits will be distributed to the incubator
investors. Through this he will also need to research the most efficient way to establish things such as an
account. This way our fund can function like an actual fund.
 Our third point of research is on analysis for specific instruments. This will be Prachet’s
responsibility. He will need to learn efficient and useful strategies in three types of analysis: fundamental,
technical, and macro. His fundamental analysis research will likely involve learning how to analyze
financial statements, pick specific useful metrics, and look at trends among the analysis strategies of
successful funds. His technical analysis research will likely involve looking at different chart patterns and
metrics to look at. This will require an extensive amount of historical backtesting and analysis on success
rates. Finally, his macro analysis will look at wide economic metrics to measure the domestic and
international forecasts of different countries. This analysis intertwined with the fundamental and technical
analysis allows us to look at broad market conditions and choose optimal markets to conduct our
individual instrument analysis on.

Finally, our research on the legal implications and processes of the fund will have to be extensive.
When establishing the fund, we will need to comply with all the legal processes of registering the fund.
Additionally, we will need to see if filing with the SEC is a requirement, or if there are ways to establish
an incubator fund with lower legal procedures. With these legal requirements also come specific costs, for
a lawyer will likely be necessary in this whole process. Also, we will need to be extremely familiar with
the tax concepts in the fund. We will need to see if the profits made by the fund are taxed themselves, or if
they are taxed to the investors later. Knowing these tax laws are very crucial in order to properly comply
with the law and inform investors about their capital which they trusted in our fund.

Methodology:
1) Initial Background Research
a) Look at the feasibility of the fund
b) Research extensively into investment strategies, allocation methods, hedging techniques
c) Market research on specific niches
2) Legal and Cost Analysis
a) Look at different fund structure possibilities (LLC + LLC or LP + LLC)
b) Analyze different lawyers the best cost in establishing the fund
c) Research tax conditions of incubator funds
3) Continue Research and Establish Niche
a) Identify niche to capitalize on
b) Extensive research on instruments in the niche
c) Start to form investment strategy
d) Start to form fundamental & technical research
e) Look and narrow down macro analysis metrics
4) Backtest
a) Backtest investment strategy
b) Backtest technical indicators
c) Fix tweaks and continue backtesting
d) Refine strategy through historical backtesting
5) Establish Fund and Gain Incubator Investors
a) Legally register fund
b) Start to market investment strategy to incubator investors (close family and friends)
c) Establish investment account for fund
 d) Start initial investing
6) Invest
a) Start implementing investment strategy
b) Start officially executing instrument analysis
c) Distribute profits to incubator investors

Materials:
● Computer
● Internet
● Capital
● Lawyer
● Backtesting Program
● Google Drive
● Google Sheets
● Google Docs

Partnership:
Doing this task alone will be an extremely difficult task due to all the various responsibilities and
processes which a fund requires. For this reason, we will require a partner in this project in which we can
split the responsibilities of establishing and running the fund to maximize efficiency. In regards to sheer
research on fund endeavors, we have decided that it would be optimal to split this research so each partner
can get a more optimal and comprehensive knowledge on each subject. This presence of deeper
understanding and multiple perspectives in the fund will inevitably make its inception and performance
more efficient and successful, as is consistently backed by research.

In the fund’s approach, Eshaan will take over the research in the aspects of investment strategy,
risk management, and executing trades. In regards to investment strategy, he will conduct extensive
market research to try to find a niche market in which our fund can capitalize on. To add on, he will need
to determine the class of instruments to invest in and determine things such as allocation strategies. All of
this will require a great deal of research, case studies, and historical backtesting. In regards to risk
management, he will need to determine diversification and weigh the use of derivatives and cash to see
which would be optimal in the fund’s specific investment situation. Different strategies will require
different methods of risk hedging, and selecting the best strategy is critical in the success of the fund.
Finally, executing trades plays a large part in the efficiency of a fund’s strategy. To maximize this
efficiency, he will need to conduct an in-depth analysis on trade entrance strategies and platforms to use.

Prachet’s work will mainly encompass the specific idiosyncratic selection of instruments in the
fund’s strategy. Specifically, his work will cover the aspects of fundamental analysis, technical analysis,
and macro analysis. In the fundamental analysis, he will research specific financial metrics that would be
useful in our investment niche and analyze the financial statements of equities in question. In the technical
analysis, he will look at trends and patterns in the charts of assets to look for potential long and short
opportunities. To supplement, he will also analyze the effectiveness and usefulness of different technical
indicators such as mean reversion, cointegration anomalies, and more. Also, his in-depth macro research
will help forecast the economic situations of domestic and international countries to determine broad
favorable conditions to implement the fund’s investment strategy.

Finally, there are many miscellaneous tasks which both partners will play an active role in
completing. For example, both partners can help in the legal analysis in the fund incubation process to
determine the motions and find the most cost-efficient legal parties. Also, when promoting the fund and
gaining investments, both investors will work towards marketing efforts with close family and friends.
This will be especially useful since we are able to benefit off the personal relationships of multiple
parties. With simple tasks such as accounting too, both partners can play a role in completing these. With
this division of tasks, the fund’s incubation process and operations will become more efficient and
successful.

Conclusion:
We anticipate the final result of this project will be a full fledged incubator fund in which we can
continue applying and learning more about asset management. Starting an incubator fund will not only
allow us to gain experience through an efficient way, but it will also allow us to be in a positive feedback
loop where the very act of management brings more opportunities of learning and growing.

For this project to be successful and efficient, we need to make the process of development a
priority and be willing to devote a great deal of time towards the manner. We know that it is going to be
far from an easy process, but doing so will be very beneficial to us in the long run. Through this we will
discover not only a niche, but will start to garner a true sense of expertise on the subject as we tangibly
invest in certain assets and fun a professional portfolio

Obviously beating the market is a very difficult task and is one in which many portfolio managers
have attempted and failed at throughout history. With this incubator fund, we truly hope that we will
gather such knowledge and find such a niche that will allow us to at least come close to achieving this
feat. Not only will this incubator fund serve beneficial to us as investors in gaining knowledge, but it will
also serve beneficial to the individuals who invest in our fund. Being an incubator fund, the likely
investment which individuals will make is fairly small, and the return which we will try getting will be
worth their investment.

With all the conceptual asset management knowledge, we will also start to get a sense on the
lifestyle in the field of asset management. We will know how it feels to invest money for other people and
will also start to think like a true portfolio manager. We will become a lot more familiarized with a variety
of different instruments, economic trends, and market inefficiencies. As many investors know, you get a
lot more out of actually applying your knowledge in a portfolio versus just learning about it, and this is
one of the key things we will take away from this fund. We feel like overall, this incubator fund will give
us a very significant edge in the field of asset management and will allow us to grow at exponential
levels.

Calendar and Timeline:

Initial Background Research/Legal and Cost Analysis
● Week of 1/17
○ Research into applicable investment strategies
○ Niche searching
○ Legal analysis
● Week of 1/24
○ Narrow down lawyer list
○ Continue investment research and niche searching
○ Start instrument analysis research
● Week of 1/31
○ Finalize lawyer
○ Narrow down niche
○ Make a list of feasible investment strategies
○ Research instrument analysis

Establish Niche/Establish Fund

● Week of 2/7
○ Establish niche
○ Reach out to potential lawyer
● Week of 2/14
○ Establish niche
○ Form investment philosophy
○ Narrow down analysis metrics and indicators
○ Start fund establishment
● Week of 2/21
○ Establish niche
○ Form investment philosophy
○ Narrow down analysis metrics and indicators
○ Start fund establishment
● Week of 2/28
○ Establish niche
○ Form investment philosophy
○ Narrow down analysis metrics and indicators
○ Start fund establishment
● Week of 3/7
○ Backtest investment strategy and technical analysis
○ Refine strategies
○ Experiment with fantasy finance

Market Fund/Start Investing

● Week of 3/14
○ Create presentation on investment strategy
○ Create script
○ Quantify historical backtesting
● Week of 3/21
○ Start reaching out to contacts
○ Raise capital
● Week of 3/28
○ Start reaching out to contacts
 ○ Raise capital
● Week of 4/4
○ Start reaching out to contacts
○ Raise capital
● Week of 4/11
○ Start implementing strategy
○ Reach out to more contacts
○ Raise more capital
○ Fund established!