# kaal:claim:1428387-010

**Claim.** Independent administrators and valuation committees do not solve the independence problem for startup funds, because a majority of hedge funds in their startup phase try to keep overheads down and so may have independence problems precisely when independence is most crucial.

**Type.** failure  **Support.** argued

**Holds when.**

- hedge funds in their startup phase

**Source quote.**

> Even if independent administrators and valuation committees are used, it is important to note that a majority of hedge funds in their startup phase try to keep overheads down. Thus, they may have problems with independence in a phase when independence would be crucial.

**From.** Kaal, *Hedge Fund Valuation Retailization, Regulation, and Investor Suitability* (2009), II.C Conflict of Interest of the Manager, page 10

**Cite as.** Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

**Verify.** sha256 of source PDF `6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202009%20-%20Hedge%20Fund%20Valuation%20Retailization%2C%20Regulation%2C%20and%20Investor%20Suitability.pdf

**Failure mode.** startup-independence-gap  (family: board-and-oversight-failure)

**Topics.** innovation, economics

**Keywords.** independent-administrator, startup-funds, valuation-committee, cost-constraints

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