Hedge Fund formation as a service

^ this 100%

surge-protector

I think a start called repool, a YC company, is doing this already.

Kevin, co-founder of Repool here - happy to answer any questions on how it works and/or how it's different than historical "prepackaged" offerings.  I would broadly generalize historical "fund in a box" offerings as:

A) Pointing you at preferred vendors, but it's still a lot of admin/cost/time (this is what a PB like Jefferies/BTIG/etc would do; they would point you at 2-3 options per each part of the launch "stack" i.e. formation, admin, compliance, banking that they are familiar with)

B) Some sort of subsidiary/non-standalone entity i.e. you are actually structured under a broader umbrella structure of an RIA or investment manager as effectively a PM, which can have certain legal/administrative considerations.  This is particularly common in closed ended funds. 

C) A launch where they take a stake/some sort of preferred payback terms in the GP/Manager entity, and/or some sort of first loss structure you guarantee.  First loss-related such structures can be quite complicated and punitive, and in general, giving away parts of your incentive allocation/performance fee and/or management fee when you're a subscale manager can make already tenuous economics unviable.

And across the board, none of these are really technology companies, but rather services businesses, so it's all quite manual and administratively intensive.   That aside, it's not that those are objectively bad options by any means, but generally not necessarily what people are originally imagining when they plan to open a hedge fund.  It depends on your goals, timeline, personal preferences, and cost-tolerance/anticipated fund size.
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There's of course the "normal" way to launch a hedge fund, which I think is generally preferred to the prepackaged offerings, with the downside that this is a notoriously confusing, expensive, and time consuming process (industry average is about 6 months).  There's quite a bit of a "you don't know what you don't know" challenge for first-time fund managers that makes a self-driven process a bit esoteric and drawn out (especially the process of figuring out what the right rules and structures are for you with lawyers), and naturally, each vendor has their own interests (i.e. we find that compliance firms often oversell complaince that isn't legally required of a typical exempt investment adviser, but it's easy for them to scare a first-time manager into buying such services; similarly, if you stumble into some admins - certainly not all - especially if you tend to go after traditional accounting firms, they'll often do the same and sell you a bunch of external cfo and admin and accounting services that are strictly unnecessary).  Your best partner would be the law firm, but you have the paradoxical relationship of wanting their help but not wanting to pay them indefinitely just to learn things.

About us:

I'm not really sure what the rules are on WSO about talking your own shop, so i'll keep it limited, but on the Repool side:

- In short, we make it easy to launch and operate hedge funds.

- We're a venture backed (YC, Canaan, Matrix, etc) platform and essentially "vertical SaaS" i.e. we put all the core backoffice pieces of launch and ongoing operations into one place, and we do true, standalone, institutional-style hedge funds that we have no ownership tie in to or affiliation to.  That means entity formation, offering docs drafted in association with Lowenstein Sandler, one of the leading institutional law firms for pooled investment vehicles, fund admin and accounting, basic compliance filings, integrated banking, and certain software to simplify administrative complexity + investor relations.  We do not handle taxes or audit.

- We tend to focus on US onshore emerging managers trading on-exchange assets (i.e. we don't do illiquid asset related stuff, crypto, PE, RE, VC).

- We can get a typical US onshore manager up and running in about 3 weeks from scratch to launch, which is lightning fast comparitively (not incl brokerage set up time, which can be weeks to months depending on who you prime with)

- We are very picky about who we work with as we are not a startup that plays fast and loose given the regulatory nature of the space and the fact that we have an end-to-end relationship (i.e. there are a lot of bad law boutique firms out there that are happy to take $20k to throw a set of docs at you and let you crash and burn, but for us that would be a huge problem as we're a SaaS business)

Miscellaneous thoughts

I'm not sure what the Luxembourg comment above is about.  Most US managers run a US fund, or a US fund in conjunction with an offshore structure (which is still by far most commonly Cayman).  65% of all global hedge fund AUM runs through US entities.  A lot of lay people have some false pre-conception that by going international structure, somehow you get to avoid laws, which is completely wrong.  Advisers based in the US are subject to the Advisers Act, and if you sell to investors in the US, you're subject to the Securities Act, period, and it doesn't matter if you've got a Zimbabwean entity or Chinese one.  Instead, offshore entities are principally about taking in offshore capital to prevent double taxation and/or provisioning of a US Tax ID and Schedule K-1 (which most international investors absolutely do not want).  But if you have US investors, they would almost always go in a US hedge fund, and even if you spun up a, say, standalone Singaporean VCC or Luxembourg or UAE fund, you still have to abide by all the same laws as a US onshore fund, but now you've just introduced also the laws of some international jursidiction of (potentially) no reason.

I've never heard of any reputable Amlaw practice or boutqiue hedge fund practice recommend offshore entities as a starting point for a principally US based fund, and i would be generally quite dubious of anyone who does for the aforementioned reasons.  
 

Let me know if you have any other questions - cheers.