Private Fund Time To Launch Does Not Have to be So Lengthy

Launching a private fund in the United States can be an almost daunting endeavor, fraught with regulatory hurdles, operational complexities, and significant time and financial investments. From hedge funds and private equity to real estate funds, the challenges are multifaceted, and the traditional route to launching a private fund can be a lengthy process, often taking anywhere from 6 to 18 months.

One of the most significant hurdles is the intricate regulatory landscape. The Securities and Exchange Commission (SEC) imposes stringent requirements on fund formation, investor qualification, reporting, and compliance. Navigating these regulations can be time-consuming and costly, requiring expertise in securities law, investment advisory regulations, and other relevant areas. Additionally, each state has its own set of laws governing fund formation and operations, adding another layer of complexity.

Operational challenges are equally substantial. Building a robust fund infrastructure from scratch involves establishing back-office functions such as accounting, investor relations, compliance, and risk management. This requires hiring qualified personnel or outsourcing these functions, both of which can be expensive and time-consuming. Furthermore, fund managers must develop sophisticated systems for portfolio management, investor reporting, and compliance monitoring, which can be a significant technological undertaking.

Fundraising is another critical challenge. Attracting investors requires a compelling investment thesis, a strong track record, and a well-developed investor relations strategy. Building a robust investor base can take years and significant resources.

To address these challenges and accelerate the fund launch process, many fund managers are turning to platform solutions.

Platform solutions typically provide a range of functionalities, including fund structuring, investor onboarding, subscription and redemption processing, portfolio management, financial reporting, and compliance monitoring. These tools automate many of the manual processes involved in fund operations, improving efficiency and reducing the risk of errors.

Moreover, platforms often offer access to a network of service providers, such as legal counsel, auditors, and custodians, at preferential rates. This can help fund managers save on professional fees and expedite the fund launch process.

By centralizing fund operations on a platform, fund managers can gain valuable insights into their portfolio performance and investor behavior. This data-driven approach enables better decision-making and improved investor communication.

While exact figures can vary based on fund complexity and specific platform capabilities, it’s reasonable to estimate a potential time savings of 30-50% when using a platform.

It’s important to note that while platform solutions can significantly accelerate the launch process, there are still essential steps that require human intervention, such as regulatory approvals and fundraising. However, by streamlining the back-office operations, platforms free up fund managers to focus on these critical activities.

Launching a private fund in the US is a complex and time-consuming process. However, by leveraging platform solutions, fund managers can streamline operations, reduce costs, and accelerate time to market. While these platforms are not a panacea for all challenges, they can be a powerful tool for fund managers seeking to navigate the complexities of the US fund industry efficiently and effectively.

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Gregory Poapst is a Managing Partner at Fundviews Capital. Connect with him on LinkedIn here.

Fundviews Capital is a full-service end-to-end Fund Management Platform.  Our platform provides a complete end-to-end solution for asset managers or wealth managers to structure, launch, operate and grow their professional investment funds. You can launch a fund in a matter of weeks, not months, and with minimal capital outlay – not only reducing the risk of launching a fund but also maximizing your chance of success. Once launched, you will find that a dedicated team of professionals is just a phone call or email away at all times, handling all aspects of the back and middle office for your fund.