It may be better than a garage, the once-archetypal home of the start-up hedge fund manager, but nonetheless Alcantara Asset Management has chosen just a single room to begin its life running London's latest hedge fund. It employs just four people. To many observers, the surprise is seeing any firm of Alcantara's tiny size still being set up as a hedge fund manager.

The days of tiny hedge fund start-ups are supposed be over. The growing attention of financial services regulators, together with the fact that most investors in hedge funds these days are institutional investors that insist on their managers having institutional-standard systems, means the cost of complying with rules and requirements is supposed to have become prohibitive for any hedge fund manager with less than about $100m (€70m) under management, according to investment consultants and fund of hedge fund managers.