A fund has costs that are both one-time and recurring. A fund incurs one-time organizational expenses in the first year, usually in the form of legal, accounting, and state compliance expenses. Here are the vendors that typically make up those expenses.
- State domicile filing fees (eg: Delaware)
- Blue Sky Fees (Filed with NASAA, fees based on state where LPs reside)
- Form ADV Filing (IARD)
- Legal formation fees (law firm or fund administrator)
Typical estimates for organizational expenses for a small fund range from 50-100k.
A fund also incurs recurring expenses to maintain and manage the funds starting in the first year. Broadly, they are called fund administration expenses and, for smaller funds, include at a minimum the following:
- Annual Tax Preparation
- CPA/Accountant for bookkeeping, financial statement prep
- Legal Operations
- KYC/AML and other compliance expenses
- Treasury (banking)
Typical estimates for the annual costs of a small fund range from 20-60k depending on the service provided.