Start Today!
Begin your hedge fund formation process today
To begin starting a hedge fund you will need to speak with a lawyer to help you work through all of the legal and regulatory issues which hedge funds must comply with. The type of law firm you need to contact will depend largely on your needs. The lawyer will help you throughout the process and will often work with other service providers to help you reach your goal. Some of the issues you will need to consider are:
The length of time it takes for you lawyer to draft the documents will be dependant on the investment strategy, the terms of the fund (i.e. contributions, redemptions, investment restrictons, etc.), the types of investors (i.e. accredited, non-accredited, qualified client, qualified purchaser, ERISA), the fee schedule (management, performance fee/allocation), among other issues. Often there are other issues which will pop up along the process; these issues have the potential to delay the process. Because of this we advise having a long conversation with counsel who is very familiar with the industry – with regard to the hedge fund industry, this is not the time for your lawyer to be learning on the job.
With that being said, it is common for a first draft of the offering documents (the private placement memorandum, the limited partnership agreement, and the subscription documents) to be ready within about three weeks. During these weeks the lawyer should be establishing all the necessary entities and, if appropriate, beginning the registration process to register the sponsor as an investment adviser with the SEC or the state securities commission. It is during this time when you should initially be contacting other service providers: brokers and/or prime brokers or mini-primes, accountants/administrators, banks and auditors. This time period is characterized by lots of paperwork going back and forth; expect the service providers to be doing their own due diligence on you – this is especially true with regard to banks.
After you have your offering documents and all of the relationships have been finalized, you will be ready to accept your first investor(s). After you have received investments it is then up to you to execute on the fund’s investment program. Below is a more detailed explanation of the process – please feel free to clink on any link to learn more about each part of the process.
We can help you with all of your hedgefund startup needs, including:
• Company formation – hedge funds typically are structured to be managed by a separate management company
• Back-end support – this includes setting you up with all of the IT and trading systems you will need to start your business
• Investment adviser registration – depending on which state you are in your investment management company will need to be registered as an investment adviser in the state and you will need to be registered as an investment adviser representative
• Document preparation – this will include the legal documents necessary to start your fund
• Introduction to service providers – hedge funds will need the help from service providers including accountants, administrators, prime brokers, capital introduction services
• Hedge fund hotels – we can help you secure office space and arrangements
• Back-end support – this includes setting you up with all of the IT and trading systems you will need to start your business
Starting a hedge fund is not an easy task – the next few months you will be in contact with your lawyers, accountants, administrators while continuing with your current job. We can act as a conduit for you and can work with all of these providers to get you going in the fastest time possible. Please note that depending on the facts of your situation the time period to fund start up can be anywhere from 3 weeks to 4 months.
Please contact us for an initial hedge fund consultation.