Quora Answer: How Do I Start a Hedge Fund in a Third-World Country with No Capital?

The following is my answer to a Quora question: “How do I start a hedge fund in a third-world country with zero capital?” 

A hedge fund is not a normal fund.  It is an actively managed fund focusing on high risk high investments in order to achieve very high returns.  Hedge funds aggressively use leverage and shorting.  It is hard enough getting investors for a normal mutual fund.  It is impossible to get someone with significant funds, and stupid enough to put it into an untested fund, run by unknowns, in a developing country of all places. 

While funds routinely invest in developing countries, I cannot fathom why you want to start such a fund based there.  There is no financial infrastructure to support such a fund, no likelihood of legislative support, ease of fund movement, and certainly no tax regime to benefit such a fund.  What you have is a castle in the sky.  The premise is wrong, and no sane investor will put money into it.