First came the dot-coms with their alluring stock options. Now hedge funds offering performance-based fees are stealing talent from banks. Clare Flynn, a 27-year-old technology portfolio manager at Deutsche Asset Management, is jumping ship to run a new, London-based hedge fund specializing in technology investing. Her abrupt late-September departure caused a few red faces at Deutsche: Earlier that month the giant money manager announced that the U.S.-born Flynn would run its first European-based New Economy fund, then scheduled for an October 9 launch.
Mike Lynch, the founder of Autonomy Corp., will provide the financial backing for Flynn’s new venture, Avocet Capital Management, which has already attracted about $70 million. Originally a retail analyst, Flynn helped jump-start Deutsche’s European tech investing three years ago with her evangelistic presentations on the power of the Internet.
“I had wanted to start a European technology hedge fund for a long time,” she says, “but it wasn’t until I met Mike Lynch that the whole thing came together.” That happened about a year ago, after Flynn’s Deutsche fund invested what would become a 5 percent stake in Autonomy, a U.K.-based maker of search engine software. The company’s market cap has rocketed from $104 million two years ago to $6.2 billion today. A self-described “closet computer geek,” Flynn concedes that Avocet’s 2 percent annual management charge, plus a 20 percent performance fee, helped persuade her to leave Deutsche. She adds, “It’s no wonder that managers leave for hedge funds.” In the meantime, Deutsche has postponed the launch of its New Economy fund until early next year.
