Can Third Parties Raise Capital For The Fund?
As noted above, third parties may be used to raise capital. However, anyone who sells interest in the fund and receives a commission (or any kind of compensation) must be affiliated with a registered broker-dealer. The compensation paid to third party marketers varies widely. A typical arrangement would pay the marketer 20% of the management and performance compensation allocable to the capital raised by the marketer for either a set period of time or for as long as such capital remains invested in the fund. Obviously, start-up funds may have to pay a higher rate or provide an equity kicker to obtain the services of a marketer. This is a complex area and counsel should be consulted before entering into any such arrangement.
