Hedge Funds Using Third Parties

Can I Use Third Parties to Raise Capital for My Fund?

Brent Gillett, a partner at the Investment Law Group, has contributed a question and answer series covering the establishment of a hedge fund and laws related to hedge funds.

Question: Can I use third parties to help me raise capital for the fund?
Answer: Yes, but anyone who sells interest in the fund and receives a commission (or any kind of compensation) must generally be licensed as a registered representative (Series 7) of a broker-dealer. There are many third party marketers who specialize in raising capital for hedge funds who are licensed with broker-dealers. The traditional third party marketing fee is 20% of the fund’s management and performance fee. Start-up funds, however, often need to provide an equity kicker or much higher compensation to entice a third party marketer to take on the project. A manger should not enter into an agreement with a third party marketer without advice from counsel.

Guest author: Brent S. Gillett, partner at the Investment Law Group. To find more information about the Investment Law Group follow this link.

Related to: Using Third Parties to Market a Hedge Fund

• Hedge Fund Tracker Tool
• Fund Marketing and Sales Advice
• Top Hedge Fund Managers
• Free Online Hedge Fund Videos
• Careers & Employment Guide
• Hedge Fund Holdings & Securities Analysis
• Hedge Fund Terminology
• Geographical Guides
• Hedge Fund Startup Tools

Tags: hedge funds questions, hedge fund third party marketing, third parties, hedge fund capital raising, capital raising campaign, hedge funds marketers

Additional Business Training.com Resources