I've been ruuning a hedge fund for 20 years. The type of client depends entirely on size. Most funds start small with friends and family money. Some start bigger like ex prop traders. Before the Volker rule many traders worked for banks known as prop traders (proprietary). The Volker Rule stopped that but prop traders thar had built up a decent track record could leave the bank and set up a fund and take they clients with them. Many of these would be banks clients which include HNW and family offices. Typically any fund under $100m under management would not have big institutional clients like pension funds. Fund of Funds (FOF) used to be a big part of the business but less so today. They used to reply on the fact that due diligence was hard and access limited. It's not the case today. So sub $10m is mainly the managers own money and friends and family. Sub $100m you may some HMW and family office and possibly a FOF. Post $100m you can start to attract interest of some of the more adventurous institutional investors. After £500 you're definitely in the institutional category. Institutions don't want to invest in small managers because they need to invest in size otherwise is not worth their effort but they also don't want to be your entire assets either hence the minimums. Once Institutions start coming in in size then asset levels can really accelerate as the aren't that many funds that are very large so they have a limited choice. So what type of client to have is entirely dependant on your size. In fact it's more dependant on your size than your returns. In the early days to have to be a bit racy to generate the interest. As soon as to get bigger to need to calm things down a bit.