Life is very different these days for larger and smaller hedge fund managers. As a general matter, larger managers can afford to be institutional. They have the resources (derived from fees) to invest in the people and process required to attract institutional capital, which generate more fees, which increase the manager’s ability to invest in infrastructure – a seemingly virtuous cycle for larger managers. Smaller managers, on the other hand, face roughly similar infrastructure expectations from potential institutional investors, but typically do not have the resources to invest in people and process at a level commensurate with their larger competitors. Or are they competitors? This is a fundamental question animating a recent report (Report) from the Alternative Investment Management Association and KPMG. The Report echoes the oft-cited sentiment that the hedge fund industry is institutionalizing. But the Report takes the discussion a step further by addressing the elements of institutionalization and the disparate impact of that process on managers of different sizes (measured by assets under management and headcount). The Report also discusses transparency, due diligence, sources of capital by geography, FATCA, competition among managers and collaboration among them. It is important for managers and investors to understand the drivers and consequences of institutionalization, and the Report advances the industry’s understanding on these topics. But the most novel and provocative findings of the Report relate to smaller managers. In particular, the Report identifies: an effective method whereby smaller managers can compete with larger managers via collaboration and emphasis on their competitive advantages; a specific channel of fund flows to smaller managers; and the geographic regions that smaller managers should be targeting in their capital raising.