Investment Management & Fund Formation Legal Services
Montague Law advises fund managers, family offices, institutional allocators, and emerging managers on the formation, structuring, and operation of private investment funds. Our practice spans venture capital funds, private equity vehicles, hedge funds, real estate funds, digital asset funds, and co-investment structures — with particular depth in technology-focused and innovation-driven strategies.
Fund formation sits at the intersection of securities regulation, tax structuring, and commercial negotiation. Getting the structure right at the outset — including the economic terms, governance framework, regulatory posture, and investor protections — sets the foundation for the fund’s entire lifecycle. Montague Law brings deep experience across fund types and strategies, combined with the practical judgment to structure vehicles that attract capital, satisfy regulatory requirements, and align the interests of managers and investors.
Fund Structuring & Documentation
Montague Law structures and documents private funds across a range of strategies, including venture capital, growth equity, buyout, hedge, real assets, and hybrid strategies. We draft limited partnership agreements, limited liability company operating agreements, private placement memoranda, subscription agreements, and side letters. Our documentation addresses the full range of economic and governance terms — including management fees, carried interest waterfalls (American and European), clawback provisions, key person provisions, investment restrictions, and LP advisory committee structures. We structure funds as single-fund vehicles, fund-of-funds, and parallel fund structures designed to accommodate different investor types and jurisdictions.
Emerging Manager Platform
Montague Law has particular expertise in advising emerging and first-time fund managers. Raising a first fund presents unique challenges — from establishing the management company and compliance infrastructure to negotiating terms with anchor investors who have significant leverage. We advise emerging managers on management company formation and economics, seed and anchor LP arrangements, organizational expenses and fee offsets, compliance program development proportionate to fund size, and the operational buildout required to attract institutional capital. We offer fee structures designed to make institutional-quality fund formation counsel accessible to managers at the earliest stages.
Investment Advisers Act Compliance
Private fund managers are subject to registration and compliance obligations under the Investment Advisers Act of 1940 and its state equivalents. Montague Law advises on SEC and state registration requirements, available exemptions (including the venture capital fund adviser exemption and the private fund adviser exemption), compliance program design, Form ADV preparation and updates, code of ethics development, personal trading policies, and the ongoing compliance obligations that registered and exempt reporting advisers must satisfy. We help managers build compliance programs that are proportionate to their size and strategy while meeting regulatory expectations.
ERISA & Tax-Exempt Investor Considerations
Accepting investment from pension plans, endowments, foundations, and other benefit plan investors introduces ERISA compliance obligations and tax considerations that affect fund structure. Montague Law advises on the 25% ERISA threshold and benefit plan investor calculations, UBTI (unrelated business taxable income) considerations for tax-exempt investors, blocker corporation structures, and the negotiation of ERISA-related side letter provisions. We ensure that fund structures accommodate tax-exempt and benefit plan capital without imposing undue burden on the fund’s operations or other investors.
Co-Investment & SPV Structures
Co-investment rights have become a standard feature of institutional fund relationships. Montague Law structures and documents co-investment vehicles, including single-asset SPVs, programmatic co-investment arrangements, and co-invest sidecar funds. We advise on the allocation of co-investment opportunities among LPs, the economic terms of co-investment vehicles (including fee and carry treatment), and the governance mechanics of co-investment decision-making. We also structure deal-by-deal SPVs for angel syndicates and investment clubs.
Secondary Transactions & Fund Restructurings
The secondary market for private fund interests has grown significantly, creating liquidity options for LPs and restructuring opportunities for GPs. We advise on LP-led secondary sales, GP-led continuation fund transactions, tender offers, and fund restructurings. These transactions raise complex issues including transfer restrictions in partnership agreements, LP consent and notification requirements, valuation considerations, and the potential conflicts of interest inherent in GP-led processes. We structure these transactions to address the interests of all stakeholders while complying with applicable securities laws.
Fund Operations & Investor Relations
Beyond formation, fund managers face ongoing legal demands across their operations. We advise on capital call and distribution mechanics, LP default provisions, portfolio company governance, follow-on investment decisions, valuation policies, annual meeting requirements, and LP reporting obligations. We also assist with the negotiation and management of side letter provisions, which have become increasingly complex as institutional investors demand customized terms.
Illustrative Engagement: First-Time Venture Capital Fund
A first-time fund manager with a track record of successful angel investments in enterprise software engaged Montague Law to form a $30 million early-stage venture capital fund. Our team structured the fund as a Delaware limited partnership with a Cayman parallel vehicle to accommodate non-U.S. investors, negotiated anchor LP terms that included reduced fees and enhanced co-investment rights while preserving the manager’s economics on subsequent closes, established the management company and developed a compliance program under the venture capital fund adviser exemption, drafted side letters for institutional LPs addressing ERISA, MFN, and reporting provisions, and prepared Form D filings and blue sky notices across applicable jurisdictions.
This illustrative engagement is a hypothetical composite and does not represent any specific client matter. It is provided to demonstrate the types of fund formation work Montague Law handles.
Frequently Asked Questions
What is the difference between a venture capital fund and a hedge fund?
Venture capital funds invest primarily in equity securities of private companies, typically hold investments for extended periods (7-10+ years), and do not use leverage or short selling. Hedge funds employ a broader range of strategies — including long/short equity, event-driven, macro, and quantitative approaches — and typically offer more frequent liquidity to investors. The regulatory treatment differs as well: venture capital fund advisers may qualify for an exemption from SEC registration, while most hedge fund advisers above the threshold must register.
Do I need to register with the SEC to manage a fund?
It depends on the amount of assets under management, the type of fund, and the state in which you operate. Managers with less than $150 million in AUM may rely on the private fund adviser exemption or the venture capital fund adviser exemption. Managers above the threshold generally must register. We evaluate each manager’s specific circumstances and advise on the optimal regulatory posture.
What is a carried interest clawback?
A clawback provision requires the general partner to return previously distributed carried interest if the fund’s overall performance does not meet the agreed return threshold by the end of the fund’s life. This protects limited partners from overpayment of carry on early successful investments that are offset by later losses. The specific mechanics — including interim clawback provisions, escrow requirements, and GP guarantee obligations — are negotiated as part of the partnership agreement.
How long does it take to form a fund?
A straightforward domestic fund formation can typically be completed in 6-8 weeks from engagement to first close, assuming the key terms are agreed. More complex structures — including parallel vehicles, Cayman feeders, or ERISA-compliant structures — may require additional time. We work closely with managers to align the legal timeline with their fundraising schedule.