A solid foundation for launching an early stage US investment fund

The international consulting company Antwort Law has been helping entrepreneurs around the world for 9 years, implementing only proven legal, tax and banking solutions. In addition to the standard work tasks that our lawyers perform every day, we help launch complex projects from both a legal and financial point of view. One of such highly complex tasks is the registration of investment funds.

Registration of an investment fund, as well as the construction of international structures or cross-border payment logistics, requires an individual approach with an analysis of not only the desired results from the activities of such a fund, but also input data, such as citizenship and the center of vital interests of the founder/founders, the geopolitical situation, the latest changes in legislation, our business practices and other factors.

If you decide to create an investment fund, then in the USA there are a number of nuances that we, as professionals, would like to share with you in this article. Let's start with the reasons why it is worth opening an investment venture fund in the USA:

Advantages for investors:

• Investments can be accepted via bank transfer from investors in the USA and around the world, and there is also the possibility of making official bank settlements with both fund investors and projects
• There are no restrictions on the number of investors or the amount of the contribution
• The possibility of officially using an affiliate program based on the fund: partners who attract investors can receive official payments from the fund to their bank account on the basis of a referral agreement (Form 1099)
• KYC (Know Your Client) verification is mandatory, but there is no requirement to collect information about the sources of funds. It is enough to receive an electronically signed statement of the purity of funds from the investor (part of the investor's path through the site).

Benefits for founders:

• The fund operates independently without a separate management company, which provides full control over the fund’s operational activities and significantly reduces operating costs
• The fund can establish an SPV (Special Purpose Vehicle, a special project company) created to implement projects in different countries around the world, which allows for a very wide geography of investments and sharing profits and risks in different projects
• The cost of annual fund maintenance in the US is lower than that of similar structures in other countries
• Basic accounting can be done independently in QuickBooks, which will allow you to save significantly on the services of a CPA (certified local accountant)
• The authorized capital is not frozen and can be used entirely for fund operating expenses
• One of the fastest options for launching - only 3 to 4 months, including opening accounts
• Work with investors can be completely online (concluding contracts through DocuSign, conducting KYC, bank settlements)
• And, of course, the reputation of the American fund is one of the highest in the world

At the same time, as in any other jurisdictions, an investment fund in the USA has its own characteristics:

• The minimum recommended investment amount is $10,000
• The permissible fund size is $50 million per year (without additional accreditation/licensing). The fund can be further expanded to $250 million through accreditation with the SEC. The procedure takes 6 to 8 months, but will require additional expenses on AML, etc.

The minimum requirements for launching an investment fund in the USA cannot be called very strict, however, without their observance, the fund will not be registered:

• The authorized capital must be calculated for the fund's operation for at least 6 months. These expenses must include the director's salary, who must have a salary, as well as office and other expenses (servers, telephone, office). We recommend contributing at least $15,000.
• The fund must have at least one US resident among its directors and founders, even if this is the only director and founder. In addition to the director, it is recommended to take a local secretary. Both employees must be on salary (W-2 form)
• Regus service (coworking, "virtual" offices) is sufficient for the fund's activities
• A local separate website and phone are required

The cost of launching an investment fund in the USA is about $120,000. The payment is divided into two parts:

1. $80,000 at the initial stage
2. $40,000 after opening a bank account

This cost does not include accounting services, office expenses, telephone, and other related expenses for servicing the fund.

Antwort Law lawyers will help you in such a complex process as registering an investment fund. Its launch requires not only specialized "narrow" knowledge, but also real experience in going through all these processes in the USA. We offer you effectively, reliably and competently:

• Analyze and consult on the structure of the fund and related documentation
• Register a company in the form of an LLC based in the USA
• Receive EIN (Employer Identification Number)
• Develop a strategic roadmap for regulatory compliance and initial administration of the fund
• Advise on all fund matters for 6 months after opening (up to 10 hours)
• Prepare fund documents and investor agreements on the legal side
• Develop KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures
• Structure the operating agreement and investor relations documentation
• Check for regulatory compliance during investor onboarding
• Develop a tax optimization strategy between jurisdictions
• Develop an SPV (Special Purpose Vehicle) structure for each borrower/investment
• Give recommendations on the website structure (including regulatory disclaimers and investor portals)
• Connect a toll-free 800 number (for 1 year)
• Implement QuickBooks with the involvement of the CPA (Certified Public Accountants) team
• Support in applying for fund licenses (where applicable)
• Assistance in opening bank accounts in the USA and/or abroad

We would like to separately highlight our extensive capabilities in organizing a nominee service in the USA. The cost of the nominee service is 3,000 US dollars per month. The nominee employee is officially hired and receives payment in the form of a salary from the company account.

With the reliable support of an experienced provider, you will get the result you need. Trust the professionals, sign up for a consultation with Antwort Law lawyers. We will be happy to help you understand the process of creating this complex project in all its details.

Lidia Ivanova

International lawyer
Antwort Law