Whether finessing derivatives at a mega-firm or wrangling a new investment model at an entrepreneurial one, Scott Prince is not afraid to tackle any financial environment.
Since 2006, the managing partner at SkyBridge Capital, the seeding firm he founded in 2005, has taken on a relatively new niche market: SkyBridge Capital is, in a sense, a hedge fund’s hedge fund. It primarily seeks out financial organizations to give seed money to without necessarily investing in their portfolios, thus gaining profit with a cut of the seeded company’s management fees.
“At some point in their early state, sometimes it is first and sometimes when they are up and running, we give those businesses capital and help them institutionalize and grow themselves,” he explained.
Seeding a Career With Impact
Prince’s own early state began when he graduated in 1985. Like many Wharton alumni, he headed to New York for a job, rooming with a couple of friends in close quarters.
“It’s hard to believe now, but there were three of us in this 1,000-square-foot apartment for $2,000 a month, which none of us thought we could afford then. We put up two extra walls, just to each have a bedroom,” laughed Steven Hazen, W’85, Prince’s best friend since their junior years at Wharton. Prince left the flat after a year to marry his college sweetheart, Sharon F. Lonner, after she graduated from Brandeis University. “He was the smart one,” added Hazen. “He always was.”
In the two decades since that crowded Manhattan existence, Prince has made a big mark. He got his MBA from the University of Chicago and had a number of jobs at Goldman Sachs & Company, becoming a partner in 1998 and co-head of equities trading and of global equity derivatives through 2004. He left Goldman to help launch Eton Park Capital Management, where he led the firm’s derivatives business and was global head of trading.
Prince believes that moving from a mega-firm like Goldman Sachs to a place like SkyBridge Capital has given him a more entrepreneurial edge, especially in the current credit-crunch environment where bigger firms feel they have to be increasingly conservative, particularly in mid-range investments.
“Having been in the business for more than 20 years, I have the organization and skill set to see the opportunities,” said Prince. “Being at a place like SkyBridge allows me to take advantage of that, to capitalize on those opportunities and move more quickly.”
Despite the gloomy financial news of late, Prince is optimistic. “I was attracted to this end of the business because of what I saw in the trends of the market today,” he said. “I think there will continue to be a secular growth in the alternative investment sector.” Big companies, Prince believes, are likely to shy away from anything but “the mega-investments” of at least $50 to $100 million. That leaves a lot of room for SkyBridge and its niche.
“Coming to us is a great way for an institution to get through its next two or three years. We felt it was the right business model to get talented early-stage managers and have an ownership stake in them,” he said.
Finding an Opening
With that lack of big-firm response to smaller or newer financial institutions’ call for funding, the opening for companies like SkyBridge could become even greater.
“It’s pretty hot stuff at this point,” said Martin Asher, the director of the Research and Scholars Programs at Wharton, to which Prince and his wife, Sharon, have contributed, establishing a Joseph Wharton scholarship in finance. “What is challenging there is the research and due diligence, which is difficult. They have their own methodologies, which are no doubt complex, but Scott has been successful so far.”
None of his previous or current successes have changed Prince’s demeanor, said Hazen, who runs a family-based New York apparel manufacturing firm. “He keeps up with his old friends, not just the high-powered people he has dealt with. Five of us take a ski trip every year and we meet for golf whenever we can.“ Prince, also a member of Wharton’s Undergraduate Executive Board, said his industry’s next generation will likely face an entirely different landscape.
“I tell young people to ask for help and always challenge with questions,” he said. “If you are not in here challenging me and asking me questions, you will thwart your growth. It is the self-motivated in this business who will grow. If you are insecure and don’t ask questions, you will not make it in a complex business like this.”