What is the best kind of hedge fund to start?

You need to be willing to risk significant capital (belonging to you) to prove you have an “edge” in trading the markets.

Sometimes the edge is in your strategy, sometimes it’s machine learning/AI — significant technology. Without this “edge”, investors can just drop their money into ETFs/indexes without management/success fees. Most people under-estimate the difficulty in raising $50–100m to start a hedge fund.

I’ve never seen a group of people say “hey, let’s start a hedge fund”… like people do with tech startups.

It’s more of a successful manager/team that already exists has an “edge” that slowly adds new investors over a period of years and years. It is a 5–20 year process, of which most people aren’t willing to be patient with. This is exactly how Ray Dalio - Wikipedia started and he was worth $15.9 billion in 2012. He founded Bridgewater Associates in 1975 — the largest hedge fund today.