How To Start A Crypto Hedge Fund From Scratch in 2026 (In Depth)

How to start a crypto fund from scratch. In this video, we're going to talk about how to actually structure your fund, what licenses you need, the splits between you and your investors, the security measures behind your funds. You don't get hacked by some crypto scammer across the world. We're going to talk about all this in the next few minutes. Now, I can speak very confidently on this topic because I currently run an 8-figure crypto hedge fund. We launched this fund, Ugly Unicorn, back in 2022. So far we've had pretty darn good performance in this fund. And I'll just say this, crypto is volatile. We're gonna talk about how to actually manage the market, managing investors through huge upswings and huge downswings when running a crypto fund. Now, if you've been in crypto for a little bit and you've done decently well, 'cause we have some feast and famine in crypto, you might have people, you know, they call the 3 Fs, friends, family, and fools that want to give you money. Okay. And you may or may not have already accepted some money for them to trade on their behalf. Maybe you have, maybe you won't. But the big question is, how do I do this? And be compliant? I don't want to go to jail. I don't want the stress raising other people's money. Like, I don't want to do this. Furthermore, do I need a license to do this? Like, how do I actually go and can I pool money together from investors into a vehicle? So let's hit on a couple of those first. The big one I want to touch on first is licenses. Do you need a license to raise from friends, family, fools, investors, you know, other people in your space that want to work with you? Well, the answer is it depends, and it depends on a few things. So let's break those things down. Number one, the big threshold in fund management game is how much money you are managing. If you are under or over this magic number of $150 million, this changes things up a lot with the type of fund you can or cannot run. Now, we help a lot of funds in Fund Launch. We've launched roughly over 300 funds in our community. A lot of them being hedge funds. And this is always the big number for hedge funds and any fund across the board, because at $150 million, if you're over— I'll put a little O for over— you now file with the SEC and you are a registered investment advisor. And to do that, to be a registered investment advisor, you have to have typically a Series 65 or a 66 to do this. Okay. Now, for many of us under $100 million, a lot of you watching might be under $150 million, especially in crypto. Now, you would file at the state level. Okay? Over here, this is the federal level. Over here, under $150 million, you're at the state level. You following along? At the state level, every state governs funds a little differently, which is kind of cool. And actually, some states have a lot of exemptions for private fund advisors, which is what you're doing, which is kind of cool. So this is a long way of saying most states don't require you to have a license. Again, check on your state though. Furthermore, you can file as an exempt reporting advisor, okay, an ERA. An exempt reporting advisor is for private fund managers to say, hey, I'm under the SEC and I'm exempt from this. You have to be over $25 million to do this. At the state level, you'd be an investment advisor if you did file. All this being said, most the funds that we have seen come through Fund Launch, our community, that are under $150 million can launch their fund without a license. Now again, check with a lawyer, check at your state level, but it's actually pretty cool. Many of these funds you can launch without licenses. A couple more caveats on this because I'm talking about all flavors of crypto. If you're going to be trading derivatives and/or option pools, you might have to file under the CFTC. This is the Commodities Futures Trade Commission. All right. If you're going to trade lots of derivatives and options and be a commodity pool operator, you need to get a license under here to do that. But again, for most people that I'm talking to, you're usually not doing this and you're not over $150 million. You're under. And most states are pretty nice and/or you can file as an ERA if you're over $25 million and you don't need a license, which is kind of cool. Again, check with your state people. You can go from there. So now that we've covered licenses, let's flip the page here and let's talk about actual structure of your fund. What I'm about to share with you is how 99% of private capital in the world is raised. Okay, I'm gonna put private capital. It's through this little structure called the GPLP structure. How this works. All right. When you launch a fund, you have 2 main entities, your general partner and your limited partnership. All right. Following along? Okay. These are entities. This is your general partner. A lot of times it's like an LLC. And this is for you, the managers. You guys own here. You are the general partner to a limited partnership. Your investors are over here. They got money. Your investors and/or they're called limited partners. Your LPs are going to be contributing money. I put them in green because they got money. All right. You following? Nice colour coding. You know, I'm pretty fancy on the whiteboard here. All right. Money into the limited partnership. that is governed by the general partner. Now I'll pause. There are a lot of— there's other ways to do this. What I'm telling you is how 99% of all private money in the world is raised through this little thing. Okay? A couple more things I'll add here. This is your— down below you'll have what they call a management company. This is also owned by the managers. That's why I put them together. So managers own this and this is you and your partners. You guys own the GP and the management company. The limited partnership is a limited partnership. It's the— this is the actual fund. Money flows in here and then as directed by the general partner, management company gets advice from here. You go and make investments. You're going and buying crypto and you're trading and doing whatever. Whenever those investments make money, the investments flow back to the limited partnership and are generally speaking split. I'll put this in blue here. are split 80/20. Okay, if you've ever heard of a 2 and 20 fund, that's kind of how it works. So if you made $100,000 of net profit, I'm doing round numbers here, that would split, 80% would go to limited partners and 20% would go to the general partner. Following? Yeah. Furthermore, a lot of funds will charge a 2% management fee To the management company. So let me— we'll review here for a second. We're going to raise, you know, we raised $10 million from limited partners. The money comes in a limited partnership. We're going to charge a 2% management fee per year or 0.5% per quarter. Okay. You following? So 2% of $10 million is $400,000 or $100,000 per quarter. That comes to your management company. That's where you can hire employees, help run things and go from there. As the $10 million makes money and in crypto, I mean, things can move quickly. Let's say the $10 million goes to $20 million, which can happen definitely in crypto. Okay. $10 million goes to $20 million. You made a $10 million gain. You would split that 80/20. So $8 million would go here, $2 million would go here. So as the general partner, you made $2 million here. And then you made, let's see, $100K a quarter or $400,000 a year. So you made $2.4 million in one year running a $10 million fund. Not bad. This scales, by the way. Like, I'm just— I'm not kidding. Like, this scales. If you had $100 million, that goes to $20 million. Okay? Like, it really does scale like that. That's one of the coolest things about funds. This is why fund managers are some of the wealthiest people on planet Earth. Now, all of this, okay, your general partner, management company, and limited partnership is governed by 2 main documents called your LPA and your PPM. These are big, thick legal documents. This stands for your Limited Partnership Agreement and this stands for your Private Placement Memorandum. Okay? These documents are hundreds of pages. All right? These, and we lovingly call them, I love to call them, The Bible. These are all the covenants, the laws, all the things involved in your fund. The Bible. Now, the cool thing about funds is you, the fund manager, get to write the Bible. You get to decide what happens in your fund and you write it in your LPM/PPM. Now, once it's written, you can't change it. You can't go change the Bible. Okay? But you get to write it. So, I put up here 80/20. You don't have to do 80/20. You could do 85/15, right? Or 90/10 or 70/30. And you write that in your Bible. You could say, hey, you know, everyone else charges a 2% management fee. You know what? We're charging a 0% management fee. And you'd write that in your Bible. Say, hey, our minimum commitment to join our fund is $250,000. And you'd write that in your LP and PPM. And then sometimes you say, hey, we as the general partners, we can allow for exemptions beyond, you know, under $250,000 where people can invest in this fund. These documents are very expensive. So cost on these, generally speaking, you're going to spend $30,000 to $50,000 on legal docs for your LPA and PPM if you go to a big law firm. Now what we do at Fund Launch, we have a group called Black Card. Black Card has this included, all the legal docs inside of here. So shameless plug for what we do. We have 15 different mentors, coaches, people that work with you. We have 8 different law firms that partner with you, a pitch deck designer, and our average cost, black card's anywhere from $25,000 to $45,000. So you get the legal docs plus all the other stuff for the same price you just go hire a normal lawyer to do all that. You get softwares, you get backend stuff. We have a full AI builder we're building right now for your fund and a community of people with 4, 3, usually 3 to 4 events a year we do to help you build your fund. So there's 2 main styles of crypto funds that are at least currently launched. There's the Hedge fund style, and then what I like to call the venture style. The hedge fund style, you are trading liquid tokens. You're actually trading coins. Maybe you're doing hedging. Maybe it's long-short fund. It's more— and there's 2 different buckets here, which I'm already kind of was getting into. Bucket number 1 is more of a fundamental approach. All right, fundamental, and over here, this bucket would be more of a technical approach. Technical approach is you're trading on charts, you're in and out of trades, you're long, you're short, you're moving very quickly. A fundamentally driven fund is more on the fundamentals, more like a Warren Buffett approach, okay? You are, this is more of our fund. We do a lot of research up front, we're doing much longer trades, usually multiple years, 'cause we go into the underlying technology, the fundamentals, of a certain project we're looking at. Other people are more technical, meaning they go, no, I don't care what the project is, the chart looks like this and has an up and a down and I'm gonna buy it. As you can tell, I'm not a technically driven person, I'm more of a fundamental investor. But again, both funds are good that way. You would put that in your LP and PPM of how you're going to trade. The venture style fund is where you're investing into more illiquid Now in crypto, let's think of it more like a venture capital firm. In crypto, you're investing into essentially startups that are focused around blockchain. Now some of them sell nodes, right? Some of them are pre-launch, pre-whatever the thing is. I would call that more of a venture-style investment fund rather than a hedge fund. Now my fund again is more of a hedge fund and we are on the fundamental side of things. Okay. We believe crypto in the long run is going to crush, and companies and/or tokens that have real-world utility behind them will win over time. That's our thesis. That's what we put in our LPAPA. That's how we have built our team around. But again, you can do whatever you'd like. Now, the reason I put these 2 differentiators here, as far as back on our last page of regulations, if you run a hedge fund, hedge funds are more regulated. There are more rules, more things. If you're a venture capital firm, for whatever reason venture capitalists have great, I don't know, lobbyists, whatever. If you can deem yourself on your Form D when you file with the SEC, you say, no, we're more of a venture firm, you get all these exemptions. There's all these rules that don't apply to venture capital firms which is awesome. So, what I'm saying is if you can, if you're like, I do a little bit of both, I'm on both sides, talk to a legal team. But if you can, Try to be a venture-style fund and be a venture capital firm rather than a full-out hedge fund, okay? Termed at least when you talk to the SEC and you file your stuff, if you can be— again, talk to a lawyer, make sure it's done— be a venture-style firm. Now, the next question I probably would get if you saw this, alright, Bridger, this is cool and all. How do I raise money? How do I find people that would give little old me some money? Now, if you haven't seen this before, this is the Fund Launch Formula. So, down on the iPad here, You'll see the fund launch formula, bunch of stuff going on. I'm gonna go to the more simple version here of the fund launch formula, then we'll draw on it, we'll have some fun. This is how we have helped hundreds of people effectively launch their funds because most people when they want to launch a fund, they want to go to the legal part first. They go, Bridger, I'm just going to call up a lawyer, great, let's get started. I always go, hold on. Before we call the lawyers, let's go over to this side first. Let's start on your deal/strategy. We talked about that a little bit back on the whiteboard here. So, Or what type of fund are you running? What's your risk parameters? How much leverage are you going to have on your fund? Great questions to figure out your deal strategy. The goal of this section right here is to find asymmetrical risk, which is a fancy way of saying relatively low risk for high return. Can you find what they call alpha? Okay. Can we find things that have maybe uncorrelated assets? I was with Ray Dalio at the Greenwich Economic Forum a few months ago. He kept mentioning, we try to find things that we find 10 to 15 uncorrelated assets, we pool them together. And what we found was we can minimize 80% of our risk without losing our upside return. Essentially, we found asymmetrical risk. We have relatively low risk for high return. Following? From there, we want to go and structure the fund. We're going to go figure out, are we doing a GPLP structure? What's in our LPA, PPM? How are we going to run the fund? And then we're going to go talk to capital. We're going to get verbal commitments. Now, there's a great quote that I love that says, if you go and ask for money, you generally get advice. But if you ask for advice, you generally get money. Okay. What I'm going to— I'm pushing you to do, set up the bones of your fund, what you would do, backtest it, date it, go back 10 years if you can. Frame and structure, and then go ask mentors or people in your life for advice. Say, hey, I'm looking to put together a crypto fund. I want to hear your advice. You're a mentor of mine. You look at a lot of deals, I'm sure. Can I pitch you for 11 minutes? I want you to rip apart my pitch. Tell me what's good, what's bad, what's ugly. Why would you invest? Why would you not invest? And really ask them for their honest truth. And they're probably going to say, no, you're doing great. No, no, no. I want the honest truth. Give me the cold hard truth. And they will tell you. Now, if you can tell from my beautiful graphic here, it's a circle. So you're going to get advice and you're going to go tweak your deal and strategy. You're going to tweak your structure. You're going to come back and pitch them 3 weeks later and get more advice. And you're going to keep tweaking your fund to build a fund that investors want. Most funds jump too quickly to legal and jump here, and then they raise $0. It's because they didn't cross validation. The whole goal of what you're doing up here is to validate your fund idea. Okay? Once you validate it, then you go to legal, then you launch. This part's not hard. Like, we do this all the time. Launching and the legal part, it sounds hard, it's really not that hard. This to me is the easiest part, is the legal formation, the launch. The hard part is the validation actually, okay? We do this all the time in Black Card and all of our stuff. And then from there, post-launch, You're going to go back and revisit those capital markets, those same people here. You're going to ask them to now close, subscribe to your fund. You're going to be managing the assets and building out your firm and you're going to be doing this forever. Okay, that's asset management. Now up here is a more complex version of the Fund Launch Formula. We have a bunch of sub frameworks here. So we talk about risk control return, how you're actually finding asymmetrical risk, the partners in your fund. You can see there we talk about a waterfall structure, closed or open-ended funds. Most hedge funds, you guys are probably going to run open-ended funds, which is a fancy way of saying Money comes in, you have a lockup period. Like our fund is a 1-year lockup period. So they join our fund for a minimum of 1 year and then after a year they can give us a 90-day notice and then they can withdraw capital. And also new fund, new money can join. So I've ran my fund for 3 years. We're still raising money and we have some money that, hey, I got a real estate project, I pull money out. Okay, give us a 90-day notice and you can pull your money out on the next quarter mark. Okay, we run an open-ended fund versus other funds that are closed-ended, that are like 7 to 10 years and they're just closed. Okay. But again, you can decide what you would like to do. When you go and talk to capital on that topic, there's 3 different types of capital people you may talk to. There's high net worth individuals, there's family offices, and there's institutions. I'm speaking from experience here with crypto. Crypto is still a very new asset class. I know we've got a lot of stuff going on, a lot of great things, but it's still Very new to family offices, especially institutions. If you're a first-time fund manager, I'm just going to tell you straight up, institutions are not investing with you, especially if you're in crypto. Okay. Furthermore, family offices, these are large, wealthy families. Maybe some would invest with you. In my experience, most are still too early for crypto. They have— they don't even like— like they're very, very early. So it's a much harder putt for them. So you'll get a few of these. I would tell you to target this group of people and maybe a few, you know, a few family offices. But I would generally speaking target over here. These are high net worth individuals. They're going to write checks between $100,000 and maybe $5 million. Maybe they're small family offices here as well. So this is the category I would play in as a first-time fund manager. I'm speaking from experience. I've talked to these groups, I've talked to these groups, and I've talked to these groups. We've closed a couple. But they are— it's an incredibly long putt. It's like, you know, you're at the golf course, you're trying to putt from 300 yards out here. This is like 150 yards out and this one's like, you know, 3 feet. Okay? What I'm telling you is just take the 3-foot putts as you're getting started, just getting going here. Go from here. Now, how do you find and attract these people? There's 3 different categories of raising capital. Number 1, get in the room. Number 2, connect in the room. And number 3, close the room. For today's call, I won't go into these deep. We have other videos that talk about this, but how do you work your buy your way into a room? How do you connect and build a list? And then finally, how do you actually close using vehicle, internal, external, the 7 principles of persuasion in there? But overall, in your fund, you're trying to build out an edge. That's what you're trying to do for your investment strategy. You can see it here. Now, the edge— I'll talk about this for a minute. There are 4 distinct categories of any edge in any fund. It is your asset class, your strategy, your team, and your structure. As you can see here, what's cool about a crypto fund, you already have a compelling asset class. For some people, some people don't like it, but a lot of people's like, hey, blockchain crypto, this is a new compelling asset class that I don't really know how to approach or talk to. So you already have that going for you. Okay, the next up would be your strategy. So how do you approach the asset class? Again, you're trying to figure out what's your edge, what makes you different, what makes you better than Bridgers? I have a crypto fund. What makes you better than my fund or the other guys or Michael Saylor just buying Bitcoin or just buying Ethereum? What makes your fund better than that? What's your unique edge? Why would I invest with you rather than these other options? That's what you're trying to answer. And so what you'd say is, well, we have a compelling asset class, but these other groups do as well. We have a unique strategy on that asset class. Okay. And/or we have a unique team that can capitalize on the strategy within the asset class. You following? Like if someone called me up and was like, yo, we got Ken Griffin, Ray Dalio, and Jamie Dimon of JPMorgan on a crypto fund. I would probably invest. I don't even care what the strategy is or asset class. This team is so strong. And then finally, structure. This is how you actually incentivize investors. So are you charging a 2% management fee, 80/20 split? What are you doing there? That can be your edge. Now, if you see here, these, you know, this is your competition, multifamily real estate fund or crypto fund. They're doing value add. They've got 20 years of experience, 3 funds prior, and this is what they're charging. So how do you differentiate yourself? This is kind of how my fund looks. We think we have a compelling— and this is Fund Launch Partners and Noble Unicorn. We've raised about $47 million for both of these funds. That's equity raised, by the way. We think we have compelling asset classes. Our strategy is strong. Our team is pretty average and our structure is pretty average. When we have an edge, though, this is what we lean on when we pitch our fund into our edge. You guys know my dad's background story, but his asset class was pretty boring, but he had a strong strategy and a strong structure. So he leaned into those things when building out his edge. But again, your goal of this— I'm zooming out here— is to get validation on your fund. All right. That's the goal of what we're doing so we can get to launch, that we can go out and build a successful fund and go from there. Now, if you're still with me, let's talk about my crypto people. Let's talk about security. This is huge. One of the big questions you will get when pitching this fund, because I pitch this fund all the time, How do you keep things secure? Now there's 2 buckets here. Number one is like crypto security. The second one is more fraud security. Now I'll talk about some, you know, on both sides, but fraud would be like there's so many crypto scams. How do I know this isn't another scam? And then crypto side would be, okay, you get— maybe I trust you guys, but how do I know someone's not going to hack your computer or wallet or whatever and steal all of our money? So let's address both of these. Over here on the fraud side, this one is true for all funds that we help launch. I make every person come through my stuff, I'm like, yo, you gotta do 2 things. This will help you like crazy. Number one, do an annual audit. How this works, you know, most people avoid audits. Our fund invites audits. We do an audit every single year. I actually pay a group out of Chicago, their name's Berkower. There's other ones, there's Tanner, there's a bunch of other ones. We pay them, I think it's roughly $20,000 a year. They come and audit our entire fund and we publish that to investors. You can go to my website right now. You can see our audits from 2022, 2023, our 2024 audits getting finished right now. And then we're going to do a 2025 audit for next year. Okay, boom. Do an annual audit. Make it part of your practice. Always, always, always have audit financials. Next one, use a Third-party admin. So what is this? This is a company, not a software. Don't use a software. Softwares are softwares. I read all the docs of all these. Use a third-party administrator. A third-party administrator checks and watches all of your wallets, tracks every dollar in and out, helps you with reports, statements to investors, runs all the backend calculations of your administration for your fund. These 2 things crucial. You can, depending on the size of your fund, these will be anywhere from $10 grand a year to like $50 grand, maybe even higher. But for a startup fund, that's kind of your costs. Carta, there's a bunch of other groups. We have tons of discounts in BlackCard with these and these auditors. We get bulk discounts in BlackCard, okay? But when I pitch my fund, I always tell my investors, hey, just so you're aware, when you invest with Bridger, you're getting an annual audit and we use a group out of Chicago. They're a third-party administrator. They check in every single number. So you have 2 separate groups validating what I'm telling you is true. Sound good? They're like, yeah, that sounds pretty good. All right, on the security side, my business partner Dan, he's a multiple Inc. 500 winner, was on the board of Intel for the last 17 years, is now retired from that. He's done a lot in the cybersecurity space. He's done consulting work with US government agencies and all sorts of cool stuff. He has built some pretty cool stuff for our crypto backend. Now I'll give you a few things that we do inside of our fund to make sure we have crypto security. And I want you guys to do the same thing because I don't want more people getting hacked in crypto. Number one, what we do, we do multiple approvals for everything. Okay. Now I'm going to go a little bit deeper on this. This sounds pretty simple. Oh yeah. Multiple people approve. Cool. So there's a couple of different groups out there. There's groups like Copper.co, Fireblocks, Anchorage Digital, BitGo. Okay. These are crypto custodians that help make this happen. Most of them use a thing called MPC approvals. So how this works for our fund, when we want to make a trade, we have— we all have separate devices. It shards the key and does this off-chain. So I have separate devices. We usually have to authenticate them with biometric keys. Okay, so me, my partner, my other partner have to all authenticate on separate devices. Those— all those 3 keys come together And then it goes and enters the blockchain. It's called MPC verification. Okay. You can do more research on this. There's some great companies that I just mentioned that can help you do this. For every trade, we make sure this happens. Okay. MPC verification, super crucial. Now we do this because someone kidnapped Bridger and threatened me and said, I'm going to, you know, give— send me all the money. I would say, I can't send it. I'm sorry, I cannot send you the money because I need 2 other partners on different devices to send that money. And it makes it more complex to steal or hack or steal someone's money. Following? Okay. Multiple approvals. Now, this slows us down as a fund as far as trading in and out because we have not just one, not just two, but 3 approvals. You can decide on how you want to do it. But for us, that's how we've done this to make sure we have things done appropriately. A few of the things on crypto, we always do a test send. Every time we trade or send money to different wallets, it's always tested. It's always a test send to validate, make sure wallets are gone. That's just good crypto practice. Furthermore, we do revoking. Make sure you revoke your wallets. Now, what's that? Revoking is when you interact with a contract, you know, like when you have MetaMask and that little thing pops up in the corner of your screen and you have to sign that long string of, you know, words to work with a project or buy an NFT. The default setting on most of those is an infinite approval into your wallet. So what happens if you sign a MetaMask contract with your little wallet? You have an infinite portal into your wallet. 6 months later, that person can drain your money in the middle of the night. We've had people we know get drained with hundreds of thousands and millions of dollars out of wallets because they didn't know about revoking. So again, make sure you do MPC verification, multiple approvals, you do test sends, and you revoke every time you interact with a contract, you revoke. Furthermore, you put good controls on your ecosystem. I don't know how your fund is going to be set up, but you have different traders or different people, make sure they can't just send the money to their own wallet and disappear. There's been some notable funds in the news that this happened to. The founders just sent their money to their own wallets and took off. In our fund, it would be very, very, very hard to do that. We have a third-party administrator watching our wallets. We have an auditor checking our wallets. We also have to have multiple people in cahoots together to do something like that, all on MPC approval. And then we whitelist and then we revoke those addresses as well. So it'd be very, very hard to do that. Not impossible. You know, everything— there's always things that are changing, everything that happens, but Very, very difficult. What we're trying to do is slow things down. We do the same thing with wires, by the way. Any wire that goes in our fund, multiple approvals. We revoke, we do test sends, we make sure it's done appropriately. We verbally confirm over the phone because there's AI people out there that can fake and steal kind of stuff. Security of the utmost importance when you're running a crypto fund. All right, now back to the iPad here. Let's zoom in on some regulations in the United States. So under the SEC, when you're running a crypto fund— now I have a lot of people that message me like, Bridger, I'm running a crypto fund, I'm going to set up my fund in Turkey, I'm going to set up my fund in the British Virgin Islands, I'm going to go offshore for my fund. And I say, that's fine, you can do that if you'd like. However, I think it's much harder to raise money when you do that. Crypto is already seen as kind of a scam, okay? And then you're saying, okay, yeah, we're doing crypto and we're going to do it in the Cayman Islands so that we're not under the SEC and we're going to be this new asset class called crypto. It just— I think it's much harder to get an investor over the line. For us, we said no, we're doing everything by the book. We're going to be SEC regulated. We're going to be in the United States. We're domiciled here. We filed our Form Ds. Everything is vanilla, just like any other fund you've seen. It's all— it's just— it's very vanilla. The only difference is we're in crypto. We did that so we'd appeal to family offices, bigger institutions, and that we could get money from them. Okay. So how would work in the United States to do this? This is how most funds are run. So here, if you see my iPad here, you're going to file a Form D with the SEC. This is again, if I zoom out under the legal formation section of your fund, this is a Form D. And then underneath there, we're under Rule 506. and 506, okay? So a 506 fund, you can raise from 35 non-accredits, you can raise unlimited amounts of capital, and you self-verify their accredited investor status. 506, you can advertise and you raise from accredited investors and you have unlimited amounts of capital for this fund. These Reg types, Reg D, 506s and 506s, is how trillions of dollars is raised in private funds. This is the most common practice for Hedge funds, private equity, venture capital funds right here. So all the big boys do it. That's how you should do it as well. Reg D, 506, 506, you can decide which one you want to do based on the types of investors you want to have inside of your fund. Okay. Again, non-accredited and accredited investors, what those are. If I zoom out here, non-accredited investors don't fit in anything. Accredited investors, you can see here they have a $1.1 million net worth excluding their home or annual income of $200,000 or $300,000 a year. And now there's like a test you can take and other things you can be to be an accredited investor. Above accredited investor, there's 2 more categories: qualified client, $2.2 million net worth, and qualified purchaser, $5 million net worth or an entity with $25 million in assets. You following along? These are the, per SEC, the qualifications for funds. Generally speaking, the funds that me and you are going to run, you're going to raise from accredited investors. Now I know someone's calling, can I raise from non-accrediteds? You can, but it's just a huge headache. All right. The— you can do— there's little things like Reg A's or Reg CF's or others. But for a hedge fund, what you're doing with a crypto hedge fund, I would tell you, I would tell you raise from accredited investors or above. When you come file your Reg D, 506, 506, you can take 35 non-accredited. Personally, I would not take them. When you take 35 non-accrediteds, there are rules associated with that. You have to do over-disclosure to them. They can only invest— one of the rules is up to 10% of their annual income or their net worth. So if they make $100,000 a year, they can only give you $10,000. You have to over-disclose to them. Furthermore, the SEC is all about protecting the little guy. They, I mean, they do care, but if a qualified purchaser loses money, they're like, well, you know, as long as there wasn't fraud, like, you're a multimillionaire, you should have known better. But if a non-accredited investor loses money, it's on the manager. You know, you misled little old grandma into putting her $5,000 into your fund, it's on you. This is why public companies go through so much scrutiny and have to do all these reports because they can have money sold on a stock exchange to non-accredited investors. Anybody can buy their stock. Hence, there's a lot of disclosures. So if you want to raise money from non-accredited investors, fine, but you're going to have to do a lot of disclosures. Personally, I tell you it's not worth it. I've done it before. It is not worth it, but it's up to you. My fund, what I do is I'm a Reg D, I'm a 506. Both of my funds are 506s. We can only raise from accredited investors. We do this because I can advertise my fund. I can do general solicitation. Over on a 506, you cannot advertise your fund. This is why you don't see billboards for BlackRock or Blackstone or KKR or Sequoia. They don't run advertisements. They probably don't need to anyways, but by SEC law, they do not— they cannot advertise their fund. Everything has to be done by word of mouth, or a personal network. Again, and the rule is general solicitation, okay? You can't be posting on LinkedIn or other stuff that you want to raise money, but you can message people that you already have a preexisting relationship with. That's the differentiator. Over here, a 506, I can advertise. Now I run a YouTube channel, I have social media, so I'm like, hey, I don't wanna trip up a rule by talking about my fund, so I'm gonna do a 506. The one caveat is I have to verify that everyone that enters my fund is an accredited investor. So when someone wants to join my fund, I have to— usually they have a lawyer or a CPA fills out a little document. Yes, Joe Smith over here is accredited and they can join my fund. In a 506, the person can just self-verify. They just check a little box that says, I'm an accredited investor and I would like to join your fund. And we say, great. The burden of proof is on them over here. The burden of proof is on me as the fund manager over here in a 506. Underneath a Reg D 506, you're going to pick one of these exemptions. There's a 3, 3, and 3 exemption. People doing crypto funds, you are most likely going to do this 3, okay? You can raise 99 investors, and above your 35, they have to be accredited investors. Now, Bridger, my ugly unicorn fund, we currently run a 3 and a 3 fund. We were hitting our cap of 99 investors, so we broke it out. We now can raise from 2,000 qualified purchasers or 99 accredited investors because we're a Reg D 506 and we now have a 3 exemption. So if I was a brand new fund like this, what we did for my fund, I was a Reg D 506 and I did 3. Great way to start. You're now under the SEC. You have— you filed out your Form D and then under here we talked about this earlier. If you're under $150 million, you would be at the investment advisor level and/or you could be an exempt reporting advisor. Both of my funds are exempt reporting advisors. They're between $25 million and $150 million. We're under the SEC, but we don't need any licenses to run those funds. If you're not $25 million, every state is going to have different laws. Depends on your state if you need a license. All right. That was a lot of content. Okay. So you learned the GPLP structure. You learned how funds work, how they're put together, crypto funds. Now I'll tell you this, running a fund, this, you might sit here and say, well, this game, this kind of sounds kind of hard. Well, yeah, no duh. Running a fund is kind of hard, okay? Like managing other people's money is hard. This is not for the regular person. When you take someone else's money, it is a big deal. When you take someone's hard-earned money and you say, we're going to invest it for you, I'm going to be a fiduciary for you for your money, it is a big deal. But I'll tell you this, if you can do it right, if you can build the right team, it is so worth it. I had a mentor, he was talking about this. He's like, man, that seems like a lot of work. It's like, well, yeah, but if it goes well, we're gonna make like $70 to $80 million. So is it worth the work? Like the payoff is, do your math on your stream, but like we're gonna make $70 million if we just do all this work. Do you want to do that or not? And the guy was like, oh, well, if you put it in that kind of terms, like, yeah, that sounds, sounds pretty good. You know, the wealthiest people on earth run investment funds. It's the number one category of billionaires according to Forbes. If you want to learn more about funds, we have more videos on this channel. Go to fundlaunch.com. We actually help people implement all these types of funds. We teach pretty much everything for free. If you want help implementing and building out your own fund, We have lawyers, pitch deck designers, consultants that work and think tank your fund. We have a community of about 1,000 fund managers right now, all building and launching their own funds that you can look with, partner with, see what they're doing and work together. You get to work with me in Slack. You can message me, talk with me on the phone, all inside of Black Card. If you're curious about that, there's a link down below. You can hop on a call with our team to see if it's a right fit for you. So with that, like and subscribe this video to send this out to more people. We'd love to see you in the next one and we'll see you later. Bye-bye.