Fact sensitive depending on the structure set-up, strategy, amount of assets under management, domicile, to name a few, to take advantage of an applicable state and/or federal exemption from registering as either an investment or commodity trading adviser. Avoiding state or federal adviser registration will materially mitigate the fixed costs and create more viable economics for the firm. Even if a firm triggers registration it may still be eligible for a registration light exemption avoiding full registration and its associated material increase in ongoing fixed costs.

Delaware, and a limited number of others states as well as certain offshore jurisdictions offer a structure similar to a segregated portfolio company or independent collective investment vehicle allowing for multiple strategies under one structure with the legal segregation of assets (ringfenced) to avoid cross-collateral exposure. Trading organizations with multiple strategies may find this structure appealing as well as private equity organizations; especially, if investing in multiple silo investments for a group of investors. This structure has its operational pros and cons and your strategy, short and long terms goals determine its viability for a particular strategy and offering.

(i) a robust offering memorandum describing teams, people, strategy, asset class, liquidity, etc. about 60-80 pages; (ii) a governing document for investors detailing, among other things, valuation, liquidity, fees, alignment of interests, lock-up if applicable, gate language if applicable, timing of investment and redemptions, class of investors, if applicable, etc. This is typically about 50 pages long and tailored to investor documents, strategy, firm framework; (iii) a detailed subscription agreement tailored to the material terms above and containing certain representations and warranties to protect both parties to evidence ownership interests typically 60-80 pages; (iv) governing documents for partners; and (v) the formation of entities across investment adviser and pooled investment vehicle(s), to name a few. See our private fund formation video above for examples of some structures and framework.

A pre-solicitation offering structure may be created to test a trading strategy and build a track record using "proprietary" assets before offering the pooled investment vehicle securities to outside investors. This structure is typically known as an incubator fund and a fraction of the legal cost of forming a conventional private fund offering structure for outside investors. This may be used to first test a strategy and build a track record before offering and raising assets from outside investors. A typical incubator offering framework will not include, among other things: (i) a detailed offering memorandum, (ii) governing agreement for investors; and (iii) a conventional subscription agreement to evidence ownership by outside investors in the private fund securities; and (iv) certain additional counter-party set-up.

Our team is uniquely positioned with the legal and business experience of both working in-house for leading and global alternative asset management organizations as well as publicly as securities lawyers to established law firms to private fund managers, which means a deep legal and business skill set to provide pragmatic legal and business solutions across all phases of operating a successful private fund manager organization from inception, build out and growth during its life cycle.

A gap analysis can be specific to an area of stress or a firm wide diagnostic review across the enterprise. We review existing processes and controls for investor red flags, potential gaps, regulatory risk, business risk. Then make tailored recommendations, close gaps upon request, and offer a final report which may be used as a marketing tool to project safety of assets and a better risk managed firm to investors and proactively avoid regulatory issues before they happen.

We have relationships with third-parties that seek to raise assets for private fund managers across broker-dealers, placement agents and investors. Depending on strategy, track record and pedigree, we seek to place a client in the best position to succeed.

The opportunity at an initial meeting with a potential sophisticated investor to place yourself in the best position to succeed. Unless a pre-existing relationship with a seed investor, friends or family, a typical start-up fund will seek to raise initial assets with pre-existing trusted relationships such as friends and family. After year one, a manager may use it established track record to communicate its edge to outside investors. Depending on strategy, return profile of risk adjusted returns, market demand, firm framework in place (skin in the game) viable operations, assets under management, among other things,, determines the target market investor across high-net worth, family offices and/or institutional investors. To increase the likely-hood of marketing success, managers may seek to have the forgoing in place relative to AUM, teams and people before marketing.