Proof of Concept for Hedge Fund

I watched a video posted on the QC facebook page recently, it was about Paul Hawtin, the founder of the first ever Twitter sentiment algorithm hedge fund. While the prowess of his model was interesting in it's own right, I thought it was compelling how little testing there was.

His talk and the company bio all point to the fact that the algorithm was designed as a university project and once was proven feasible as well as was generating a positive ROI - a hedge fund structure was created. I thought this on its own was intriguing in how quickly a great algorithm wih inexperienced creators can lead to a hedge fund today and how algorithmic strategies are almost the easiest to give investors proof of concept with backtesting etcetera. Looking for thoughts on this! Experience in starting an algorithmic hedge fund would be ideal!
Update Backtest

Definitely a great story Seth! I think the way things are moving now with faster and faster processing, free backtesting on QC and widespread coding knowledge...there is no lack of resources for an individual to compete with a hedge fund. If capital is allocated democratically with no bias of age or experience as it is becoming, then I think Paul Hawtin is the first of many. Would be interested in seeing some firsthand case studies of the hedge fund creation process..

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