Eva Shang, 27, never envisioned a career in business. As a young adult, she enrolled at Harvard College and imagined a future as a civil rights lawyer. But she’d end up on a different path — leaving the university altogether to start her own hedge fund out of a garage at age 20.
Today, the hedge fund Shang co-founded with fellow Harvard undergraduate Christian Haigh is Legalist: An institutional alternative asset management firm using data-driven technology to invest in credit assets at scale, it boasts nearly $1 billion in assets.
Entrepreneur sat down with Shang to learn more about her journey building Legalist — and her best advice for other young women who want to break into the hedge-fund space.
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It’s “very unusual for college students to start a hedge fund.”
Shang met fellow Harvard undergraduate Haigh, who had an interest in data scraping, at a club on campus. “We came up with this idea to scrape the entire Massachusetts state court website with the intention of kind of repackaging it,” she recalls, “and then selling it in some way, shape or form. That part was a little bit unclear.”
But the vision would become clearer; Shang and Haigh wanted to use their analytics to save lawyers time. The duo even landed an acceptance at Y Combinator, the technology startup accelerator with headquarters in Mountain View, California. But when they arrived for the program, their idea wasn’t exactly met with enthusiasm.
General counsel at Y Combinator pulled the co-founders aside to tell them he really didn’t like their plan. “Lawyers are not exactly incentivized to use analytics because their work is based on the billable hour,” Shang recalls him explaining. “So, it really doesn’t help them at all. On the other hand, you can really use your analytics to figure out which cases are going well and which cases are going to be successful. You should use that to make investments.”
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So that’s what they did — launching with that idea in 2017. Shang acknowledges that it’s “very unusual for college students to start a hedge fund,” and the unlikely endeavor came with some challenges. While they were raising their first fund, Shang and Haigh went in for a meeting set up by one of their advisors. Afterward, that advisor received a message: Where did you find the tweens?
“At the time, we thought it was really funny that we were referred to as tweens,” Shang recalls, “but it was also not great for achieving our actual goals. And there are tons of things like that, where we knew very much how we looked from the outside. And as time has gone on, it’s gotten better — I’ve also gotten older, obviously. But initially, it was definitely an obstacle for us to overcome.”
“I think [building] one company for your entire life is kind of a badge of honor.”
Fortunately, Legalist attracted enough early investors that did take it and its venture seriously — and Shang says the fund’s sophisticated technology played a significant role in that.
“A lot of the early investors that took a chance on our first fund liked the fact that we had this proprietary algorithm that could identify cases that were going well from the court dockets,” Shang explains. “Now, of course, actually making an investment is a little bit more complicated than that. And after we raised the fund, we ended up having to figure those out as we went along.”
Once the co-founders “cobbled together” that first $10 million fund, they saw strong returns — 1.7X net of fees. That track record “really impressed” investors and allowed Legalist to raise a second $100 million fund. It raised an additional $400 million in the past two years alone and currently manages almost $1 billion in assets for “the whole gamut of institutional investors.” The fund’s been using “the technology across different strategies beyond just litigation finance,” which has also contributed to its growth, Shang says.
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As Shang looks ahead to Legalist’s future, she’s excited to see its story continue to unfold — and her own right alongside it. She has no plans to leave the fund any time soon.
“I think [building] one company for your entire life is kind of a badge of honor,” Shang says. “And it’s kind of like when you see an old couple and they’ve been married for like 60 years: One, you have to be very old, and two, your marriage has to have been very successful. So that’s kind of how I hope my life will be defined — by that endurance and commitment.”
“It’s easier to be the first outside capital for something that’s already in motion — so just get started.”
Shang’s made a name for herself as a young woman in the male-dominated hedge-fund world — and it’s a reality she’s had to navigate on multiple fronts, even when Legalist was simply trying to add women hedge fund general partners to its advisory board.
Despite asking “everyone they knew” for introductions and recommendations, finding women who fit the bill was “extremely challenging.” “So people even started recommending folks they had met once,” Shang says. “And I would get an introduction, and I’d be like, ‘Oh, so how do you know so and so?’ And they’d be like, ‘Honestly, I don’t really know why they recommended me because I’ve only met them once. I assume they must not know very many female hedge fund managers.'”
Dominique Mielle, a former hedge fund manager, is one of the women Shang recruited to join Legalist’s advisory board. Shang contacted Mielle after reading her memoir Damsel in Distressed: My Life in the Golden Age of Hedge Funds, which chronicles her two-decade climb to partner and senior portfolio manager at what became one of the largest hedge funds in the U.S. “[The book] really gives a good look at some of the structural barriers that prevent women from being successful,” Shang says.
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Shang chalks up some of her own success as a woman in hedge funds to Legalist’s “nontraditional path.” “That’s pretty typical of women who become successful,” she adds. “It’s very difficult to climb your way through a race that you’re structurally disadvantaged to win, but you can arrive at the same destination going your own way.”
And how do you set yourself up to cross that finish line? You can’t hesitate, Shang stresses.
“Don’t wait for permission to get started,” she says. “Just start. Start trading or start doing deals. The overall point here is not to wait to raise money, so if you can start on even a small amount of money to start building a track record, that’s helpful. It’s easier to be the first outside capital for something that’s already in motion — so just get started.”
