The number of funds closing after the peak in 2007 was somewhat more significant than the decline in assets. About 22% of the funds operating that year closed over the next three years while the funds under management only declined 16%. There are several reasons for this. First, with increased regulation, a greater emphasis on risk control and increased client pressure for transparency and contact, it became more expensive to operate a hedge fund and the critical mass of funds under management to be profitable escalated. In the early days of the industry, back in the 1970s and early 1980s, it was possible to start a fund with less than $10 million, and Julian Robertson and Steinhardt, Fine, Berkowitz both did so. There is considerable debate about what the critical start-up mass is today. Even though management fees have doubled to 2%, you probably need $50 million, although many go into business with less than that hoping for a strong performance year which will provide substantial incentive fee income and attract new clients. The implementation of the so-called Volcker rule will result in some brokerage firms closing or spinning out their proprietary trading operations, internal hedge funds and private equity activities. As a result we may see more hedge fund start-ups over the near term run by managers with impressive records.