Launching a fund in 2025 offers a unique opportunity to tap into a thriving private markets landscape, with $2 trillion in dry powder and projected private market AUM of $12 trillion by 2029, according to Preqin. However, success hinges on strategic planning, from choosing the right jurisdiction to optimizing your fund structure and leveraging technology. This section outlines key considerations for setting up your fund, explores a diverse range of jurisdictions (including Luxembourg, Singapore, India, US, Cayman Islands, Ireland, Hong Kong, Dubai, Malta, Bermuda, Netherlands, and Mauritius), and provides actionable insights to ensure your fund thrives in a competitive market. Whether you’re launching a private equity (PE), venture capital (VC), real estate, hedge, or trust fund, these strategies will guide your path.
1. Choosing the Optimal Jurisdiction
The jurisdiction where you establish your fund significantly impacts its regulatory ease, tax efficiency, investor appeal, and operational costs. Below is an overview of key jurisdictions, each offering unique advantages for 2025:
- Luxembourg: A European hub for PE, VC, and ESG-focused funds, Luxembourg offers tax-efficient structures like the Special Limited Partnership (SCSp) and a robust regulatory framework under the AIFMD. Its €5.9 trillion AUM in 2024 makes it a magnet for institutional investors. Ideal for funds targeting European LPs or ESG strategies, with streamlined setup processes.
- Singapore: Known for its Variable Capital Company (VCC) structure, Singapore is a gateway to Asia’s growing private markets. Its tax exemptions and $4.5 trillion AUM in 2024 attract PE, VC, and hedge funds. Singapore’s proximity to high-growth markets like India and Indonesia makes it perfect for funds eyeing Asian opportunities.
- India: A VC and PE hotspot, India saw $13.7 billion in VC funding in 2024, per Bain & Company. Regulatory reforms, such as the elimination of the angel tax, simplify fund setup. The Alternative Investment Fund (AIF) framework supports diverse strategies, making India ideal for funds targeting fintech, deep tech, or green energy.
- United States: The US, particularly Delaware, is a global leader for PE and hedge funds due to its established ecosystem and investor familiarity. With $4.2 trillion in private capital AUM, it offers flexibility through Limited Partnerships (LPs). Choose the US for large-scale funds targeting institutional investors.
- Cayman Islands: A favorite for PE, hedge, and trust funds, the Cayman Islands boast 7,000+ registered funds and tax-neutral status. Its Exempted Limited Partnership structure and proximity to the US make it a go-to for North American managers seeking offshore flexibility.
- Ireland: Europe’s fastest-growing fund domicile, Ireland’s Irish Collective Asset-management Vehicle (ICAV) is ideal for UCITS and AIFs. With €3.5 trillion AUM and passporting rights across the EU, it’s perfect for hedge or real estate funds targeting European markets.
- Hong Kong: A bridge between East and West, Hong Kong’s Open-Ended Fund Company (OFC) structure supports PE and hedge funds. Its $2.1 trillion AUM and tax incentives make it attractive for funds targeting China or Southeast Asia.
- Dubai: Part of the UAE, Dubai’s Dubai International Financial Centre (DIFC) offers tax-free zones and Sharia-compliant structures. With $700 billion in AUM, it’s a hub for real estate and PE funds targeting the Middle East and Africa.
- Malta: A cost-effective EU alternative, Malta’s Notified AIF regime allows quick market entry. Its €20 billion AUM and tax treaties make it suitable for smaller PE or VC funds targeting Europe.
- Bermuda: Known for its Segregated Accounts Companies (SACs), Bermuda is a leader for hedge and reinsurance-linked funds. Its $400 billion AUM and regulatory clarity appeal to managers seeking offshore efficiency.
- The Netherlands: The Netherlands offers the FGR (Fonds voor Gemene Rekening) structure and a favorable tax regime. With €1.2 trillion AUM, it’s ideal for PE or real estate funds leveraging EU market access.
- Mauritius: A gateway to Africa and Asia, Mauritius’ Global Business License supports tax-efficient PE and VC funds. Its $600 billion AUM and double-taxation treaties make it attractive for funds targeting emerging markets.
2. Optimizing Fund Structure
Your fund’s structure determines its investor appeal, liquidity, and operational efficiency. Consider these options:
- Drawdown Funds: Traditional for PE and VC, drawdown funds suit institutional investors with long-term commitments. They’re ideal for buyouts or early-stage VC but require robust investor relations to manage capital calls.
- Evergreen Funds: Offering periodic liquidity, evergreen funds accounted for 50% of alternative commitments at J.P. Morgan in 2024. They attract retail investors and smaller institutions, making them suitable for real estate or hedge funds.
- Hybrid Structures: Combine drawdown and evergreen features to balance liquidity and commitment. Popular in private credit, hybrids appeal to diverse investor bases.
- Fee Structures: The classic 2% management fee, 20% carried interest faces pressure. Retail-oriented funds may offer 1.5% management, 15% carry, while hedge funds use pass-through fees (up to 7%) to cover tech investments. Align fees with investor expectations and your strategy’s value proposition.
Our tip: Use the Fundway Pricing Calculator to estimate setup and operational costs across these jurisdictions. For example, Luxembourg may have higher initial costs but offers long-term tax savings, while Mauritius is cost-effective for emerging market funds.