Incubator Fund Resources
Information & Downloads
Our attorneys provide comprehensive incubator fund formation services for clients throughout the United States. Our flat-fee incubator fund service includes turn-key preparation of all the needed formation documents, governing agreements and regulatory filings to operate an incubator fund. An incubator fund provides a cost-effective solution for an emerging manager to develop a marketable trading record and test performance before launching a fully-operative fund.
During the incubator fund formation, we advise our clients on important aspects of transitioning to a fully operative domestic or offshore hedge fund to help them make key decisions. We also provide introductions and resources to guide clients toward capital sources that we have found to be effective for emerging managers. Capital Fund Law Group
We have authored numerous industry publications, including eBooks, white papers, sample PPM document excerpts and blog posts dedicated to helping emerging managers understand various aspects of forming hedge funds and other alternative funds (scroll below to read or download). Our firm has been quoted on securities law topics in some of the nation’s leading financial publications, including Forbes, Entrepreneur, and Business. Capital Fund Law Group was recognized for its exceptional investment fund legal expertise by Wealth and Finance International Magazine’s Alternative Investment Awards in 2014 and 2015.
Call (212) 203 - 4300 or email us to schedule a complimentary consultation with one of our attorneys to discuss the legal structure, regulatory requirements, timeline and costs involved in forming a hedge fund. We will also be happy to answer any questions you have about launching your fund.
Written by John S. Lore, Esq., managing partner and shareholder of Capital Fund Law Group, Forming & Operating a Hedge Fund is a brief guide for emerging fund managers. Click the button below to view and download the eBook on a mobile or desktop device.
This book provides a concise guide through the process of structuring, launching and raising capital for domestic and offshore hedge funds and other private investment funds. Throughout this book, we highlight pitfalls that fund sponsors should watch for and suggest best practices to safely and effectively navigate the process of forming and operating a fund.
This is a brief excerpt of a sample hedge fund Private Placement Memorandum (PPM) with footnoted explanations of the PPM provisions.
The PPM is based on a fictitious master-feeder hedge fund using a global fixed-income arbitrage strategy. The accompanying explanations discuss the reasons behind certain disclosure language as well as
The excerpt also provides drafting tips, best practices recommendations, potential pitfalls and common mistakes in hedge fund PPMs. The fictitious feeder fund XYZ, LP is a domestic feeder fund to a Cayman Island master fund. Although the XYZ Feeder Fund, LP specifically uses a fixed-income arbitrage strategy, the explanations provide information that should be helpful to fund managers using any strategy.
This white paper describes some of the most common hedge fund terms and how they apply to various hedge fund strategies.
One of the most important aspects of forming a hedge fund is setting the terms of the investment. When properly structured, hedge fund offering documents contain terms that adequately protect the fund sponsor and are attractive to investors. Hedge fund terms are driven by the fund’s strategy, the market trends within the fund’s asset class and the particular needs and objectives of the fund. It is crucial that the investment fund legal counsel has an in-depth understanding of current investment market trends and how those trends affect the strategy the fund will employ.
Raising capital is one of the most difficult aspects of launching an emerging fund. Many managers with exemplary pedigrees and outstanding track records are nonetheless unsuccessful in their efforts to identify and approach the right capital sources. We advise our fund clients on the legal and business aspects of raising capital. As a professional courtesy to our clients, we also provide introductions and resources to guide them toward capital sources that we have found to be effective for emerging managers.
Our firm has developed relationships with a number of funds of funds that have investment strategies focused on identifying undiscovered emerging hedge fund managers. These funds actively look for new managers that have solid performance and promising strategies. Allocations from emerging-manager focused funds of funds necessarily involved concessions on investment terms, but for the right manager can be an effective way to reach a critical mass of assets under management to attract additional capital.
Additionally, we have relationships with a network of prime brokers, capital introduction platforms, placement agents, and other investment marketing professionals that have been successful in helping raise capital for emerging funds. We guide our fund clients through the process of selecting appropriate investment marketing professionals.
In addition to seeking capital through third parties, fund sponsors should plan to spend significant time reaching out directly to funding sources both inside and outside of the manager’s existing professional and personal networks, particularly to those sources with a particular interest in the fund’s investment strategy. To help guide our clients to appropriate funding sources, we provide them with access to a number of robust investment lead databases, which are maintained by an emerging manager fund-of-funds within our network. These databases include thorough contact information for various capital sources, including: family offices, seeders, endowments, advisors and others.
“There are significant risks involved in marketing a hedge fund, both from a regulatory and investor disclosure perspective. Care must be taken when conducting marketing efforts to avoid running afoul of regulatory restrictions and overstepping disclosure parameters. Legal counsel should be involved at each step of a fund’s marketing process.
In addition to the legal issues involved in marketing a fund, there are practical, business considerations that can be outcome determinative when launching a fund. In our work with funds of varying sizes, backgrounds and strategies, we have seen a number of factors that influence a fund’s marketing success. This white paper addresses both the legal and business issues that fund managers should deal with when raising capital for an emerging fund.”
OUR LEGAL COUNSEL HAS BEEN QUOTED IN LEADING FINANCIAL PUBLICATIONS, INCLUDING FORBES, ENTREPRENEUR, BUSINESS, AND OTHERS. CAPITAL FUND LAW GROUP HAS BEEN RECOGNIZED FOR ITS INVESTMENT FUND EXPERTISE BY WEALTH & FINANCE INTERNATIONAL IN ITSALTERNATIVE INVESTMENT AWARDS.
...The case should serve as a reminder that investors as well as money managers serving as stewards of their clients' financial resources (not to mention their own reputations) need to take reasonable steps to undertake due diligence when researching the viability of an investment...
"There's a lot of short-term trepidation based on regulatory uncertainty based on the SEC, with what the European Union is doing, and what various Asian regulators are doing," said John Lore, managing partner at Capital Fund Law Group.
Lore's firm advises hedge funds and private equity groups in the crypto-space. He said he's seeing an "unprecedented" number of new fund starts continuing from February.
"I think the sell-off this year has more to do with short term concern than any long-term general distaste for the asset," Lore said.
The SEC’s desire to interview cryptocurrency hedge funds, the only asset managers currently operating in the space, seems a logical next step in the development of the digital asset regulatory framework. The probe also underscores the fact that the SEC takes the crypto hedge fund space very seriously and will continue to keep a close eye on it moving forward.
“According to John S. Lore, Esq., owner of Capital Fund Law Group, PC, ‘When selecting service providers, including an attorney, administrator, and auditor, the management should consider the professional background of each provider. The level of quality of the service providers says much about the quality of the corporation’s management and business plan. Before smart people will invest in or purchase anything they seek signs of competence and stability from all tiers of the organization.”
“An accredited investor is an investor that meets the income or net worth tests established by the SEC,’ says John Lore, managing partner of Capital Fund Law Group. ‘For individuals, the investor must have a net worth or joint net worth with his or her spouse exceeding one million dollars or meet a $200,000 per year annual income threshold ($300,000 if combined with spouse).”
“John is one of the more thoughtful and detailed attorney’s we have had the pleasure to work with. He pushes us to be a better company and we have total confidence that once he has analyzed an issue and provided an opinion, it is the correct one. I’d highly recommend him to a new or experienced fund.”
— Mark Taylor | Partner | Taylor Derrick Capital, LLC
“My experience using Capital Fund Law Group to launch my hedge fund has been outstanding. While I had access to other legal talent, using a true specialist in the space proved to be extremely valuable for my firm. John Lore and his team skillfully guided my team through the necessary steps to get started with the right structure and terms. I value the ongoing relationship I have with this outstanding legal firm, and continue to benefit from the high value added by John and his team in a complex and changing regulatory environment for financial service firms.”
— Joseph Cook | Managing Director | Concentus Global Partners, LLC
“John Lore and the Capital Fund Law Group team were an extremely professional solution for the legal side of my macro hedge fund launch. Their expertise in all matters relevant to the drafting of fund documents and the applicable statutory requirements was evident throughout the process of my launch. I would recommend their counsel highly.”
— Matthew Klecker | Founder, CIO | Klecker Capital Management, LLC