A hedge fund incubator cuts launch costs from $30,000 to $2,000-$5,000 by skipping the legal documents required for outside investors. Instead, you bring in investors as general partners who own a slice of the fund based on how much they put in, using a simple operating agreement instead of complex fund paperwork.
Chapters
This is what's called a hedge fund incubator. Instead of paying $30,000, you pay $2,000, maybe $5,000 to set this whole thing up. How this works? Again, on the last page, we talked about the LPA, the PPM, the bible. That is where a lot of your cost comes from, from building this. It's pretty expensive to build an LPA, PPM. Again, that's $30,000. A hedge fund incubator does not have Limited partners over here like we were saying before. It doesn't do that. You don't have any investors, no investors, and hence because you don't have any investors or limited partners, you don't need an LP and PPM. So then, Bridger, like, how do you raise money? Well, what you do is your investors, they actually join the general partner. So how this would look as an example, I've got family friends that want to give me money. I'm going to reserve 25% of the GP for me. The investors are gonna come and they put money in and they're gonna get split the remaining 75% pro rata or just on a percentage basis and so somebody puts in 50 grand, they get I don't know 10% and somebody puts in 100 grand, they get 20%, right, of the thing and they all start filling up this general part and they actually are general partners with me. Like they are part of my stuff and we set up a operating agreement which is much cheaper. Again, 2 to 5 grand for this and there's an agreement and we are actually partners. The general partner then commits the money. The money flows into the limited partnership of let's call it $200,000 flows in and our $200,000 is here and then the $200,000 can start trading and then when the trades make money it just flows back here and then just flows here and you distribute it based on your operating agreement and as partners.
