This year is expected to be a hectic one for hedge fund startups, according to Pensions & Investments report. This can be attributed to various factors, which include seasoned hedge fund teams planning to establish their own companies, available seed money from bigger alternative investment managers, spinouts of bank hedge fund and trading units to fulfill Volcker rule requirements and the readiness of institutional investors to invest with managers that don't possess long track records, the report said.

Boston-based investment consultancy Cambridge Associates LLC Managing Director and Hedge Fund Specialist Jon Hansen told Pensions & Investments that near the end of last year and the start of this year, the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act's Volcker rule on December 10 led senior hedge fund executives to exit their old companies.

Cliffwater LLC Chief Executive Officer Stephen L. Nesbitt was also quoted in the report as saying that talented managers are initiating their own companies because many of the biggest hedge fund managers are not welcoming new investors and are consequently not hiring.

Nesbitt said this is the second phase of the institutional investment industry. This means that a lot of investors "are looking for new hedge funds to invest in, since so many big funds are closed, and they need either ... to meet their asset allocation target or want to replace some of their managers."

According to the report, attorneys, prime brokers and providers of financial software and risk management systems are in the midst of aiding hedge fund firms that are getting ready to launch. However, they did not provide names.

Aravt Global LLC is one startup that industry insiders look forward to, the report said. Ziff Brothers Investments LLC former Managing Director and Hedge Fund Sector Head Wui Yen Liow is the founder of the New York-based startup. Another hotly awaited hedge fund shop is the one that will be launched by former Eton Park Capital Management LP Senior Portfolio Manager Anand Desai, the report said.