Asian hedge fund start-ups received $1.1 billion in early-stage capital from investors globally over the past three years, but the biggest beneficiaries have been large funds with at least $100 million in assets at launch and which have already secured seed investment, finds a survey by Citi.

The average size of managers receiving early-stage allocations over the past three years was $193 million at launch. The typical Asian hedge fund recipient was just over $100 million, while those in the US and Europe – where funds are generally larger – were about $200 million.

Additionally, more than one-third of hedge funds globally that had received early-stage allocations also had seed investors, according to the poll. “[You’re] more likely to attract early stage capital if you launch with a greater AUM,” says Robert Baigrie of Citi’s capital introduction team in Hong Kong.

Of the 74 respondents surveyed in the US, Europe and Asia, fund of funds – which have traditionally been the largest source of early-stage investment capital – represented 70.3% of the investors polled. The remainder comprised family offices, insurance companies, endowments, wealth advisors, private banks and hedge fund platforms.

A majority of US investors (88%) indicated they had no geographical bias when investing in hedge funds. In Europe, home to the second-biggest pool of start-up investors after the US, 86% were equally unbiased, notes Martin Visairas, Asia-Pacific head of sales and capital introduction at Citi.

“That tells you that US investors would be investing in early stage [funds] in Asia, same as the Europeans,” says Visairas.

Of the Asia-Pacific respondents, 43% say they prefer to invest in funds within the region, with 57% claiming to have no geographic preference. However, historically they have favoured investing within Asia, and likely retain a strong home bias, Visairas adds.

Asian investors have also been shown to be strong bargainers when it comes to deliberating fees with fund managers. The hedge fund industry standard is 2% for management and 20% for performance.  However, compared to investors globally, those in Asia expected the largest discount on performance fees, with 78% expecting reductions of between 5-10%.

Larger funds tend to have the upper hand, compared with their smaller peers, when it comes to fee negotiations, says Baigrie.

According to data provider Eurekahedge, funds with a smaller pool of assets tend to offer more attractive terms to investors, while those helmed by well-established traders tend to have financial backers and also higher fees.

The average fees for new Asian hedge fund launches have dropped over the years to 1.49% for management and 18.71% for performance in 2011, according to Eurekahedge, down from 1.84% and 19.08% in 2007, when the industry was at a peak.