There's a lot of turn-key hedge fund solutions out there that will guide you through the process of starting a hedge fund. However, it's surprsingly easy to start one on your own and on the cheap... from the legal\regulatory perspective that is.
It really only comes down to accomplishing 2 things, creating an Limited Liability business entity and then becoming a Registered Investment Advisor (RIA). For all the steps to creating a startup company, refer to my previous post: Steps to get a Startup going (cost: ~$200)
After you have carefully gone through that process, you now have to simply go through the steps of becoming an RIA.
Step 1: Prepare for the Series 65 regulatory exam. This is a 140 question multiple choice exam which you just need to score a 69 on. Read through the Investment Advisors Act 0f 1940 and buy a book on the series 65 exam to prepare yourself. (Cost: ~$20)
Step 2: Take the exam by filling out the Form U10 and send in your check to FINRA (Cost: $135.) (Which is conveniently located at 7th & Market Sts in Phila. PA)
Step 3: Register your RIA with the Investment Adviser Registration Depository (IARD). Find instructions on www.IARD.com (Cost: $0)
Step 4: Register your new RIA firm with the Financial Industry Regulatory Authority (FINRA) by filling out the 28 page Form U-4. (Cost: $30)
Step 5: Register your "offering" with the SEC under Rule 506 of Regulation D of the Securities Act of 1933. You need to do this to get a CIK number from the SEC and file Form D with the SEC and with each state in which you plan to offer or sell interests. (Cost: $0)
I'm sure this sounds easier than it really is, but at least this gives a perspective on working through the red tape, and illustrates how simple it is to actually set up one of the most lucrative business models in the world. God Bless America!
Also, if you need any help with your corporate identity, web design, e-marketing, etc., please visit www.W3Portals.com
Lastly, after you've done all this, now comes the hard part...selling your fund to investors.
Start hedging your bets!!