Free Hedge Fund Business Plan
For Raising Capital from Investors, Banks, or Grant Companies!
Please note that the financials
in this complete free business plan are completely fictitious and may not
match the text of the business plan below. This free business plan demonstration
purposes only. If you are interested in purchasing the completed editable MS Word
and Excel documents for this business plan, please click the button below! Also,
the text of the business plan is formatted with a fully automated
table of contents.
It should be noted that there is no special software required to use these
templates. All business plans come in Microsoft Word and Microsoft Excel format.
Each business plan features:
- Excecutive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors,
or Grant Companies!
1.0 Executive Summary
The purpose of this business plan is to raise $10,000,000 for the development of a hedge fund while showcasing the expected financials and operations over the next three years. The Hedge Fund Inc. (“the Company”) is a New York based corporation that will provide investment management for its investors in its targeted market. The Company was founded in 2008 by John Doe.
1.1 Products and Services
The Hedge Fund will solicit capital from accredited investors (defined later) with the intent to use this capital to make investments marketable securities and other hedge funds. The Company expects to generate compounded annual returns of 25% to 35% per year on capital invested into the Hedge Fund’s portfolio holdings. The Management of the Hedge Fund will retain a 20% ownership interest in the firm. Details of the fee arrangements for the Hedge Fund can be found in the Company’s private placement memorandum. The third section of the business plan will further describe the investment management services offered by the Hedge Fund.
1.2 The Financing
At this time, the Company is seeking to raise $10,000,000 for the development of the Hedge Fund’s operations. Mr. Doe is seeking to sell an 80% ownership interest in the business in exchange for this capital. 85% of the invested capital will be used for direct investments into the firm’s investments.
1.3 Mission Statement
Management’s mission is to develop the Hedge Fund into a large scale investment firm that that will provide dividend income, capital appreciation, and interest income to the Company’s investors and senior directors.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the investment management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Company will to undergo an aggressive expansion after the successful completion of the initial capital raising period. As the Hedge Fund is a multifaceted investment firm, Management will expand each segment of the business by developing limited partnerships that will attract additional capital for the Company’s marketable securities and fund of funds portfolios.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Hedge Fund, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Hedge Fund requires $10,000,000 of equity funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
At this time, Mr. Doe is seeking to sell an 80% interest in the Hedge Fund in exchange for the capital sought in this business plan. Please reference the Company’s private placement memorandum regarding more information regarding the Company’s fee and ownership structure.
2.4 Management Equity
John Doe currently owns 100% of the Hedge Fund, Inc.
2.5 Exit Strategy
The Management has planned for three possible exit strategies. The first strategy would be to sell the Company to a larger entity at a significant premium. Since, the financial management and hedge fund industry maintains a very low risk profile once the business is established; the Management feels that the Company could be sold for ten to fifteen times earnings. The second exit scenario would entail selling a portion of the Company via an initial public offering (or “IPO”). After a detailed analysis, it was found that the Company could sell for twenty to thirty times earnings on the open market depending on the business’s annual growth rate and strength of earnings. However, taking a company public involves significant legal red tape. Hedge Fund, Inc. would be bound by the significant legal framework of the Sarbanes-Oxley Act in addition to the legal requirements set forth in form S1 of the Securities and Exchange Commission. The Company would also have to comply with the Securities Act of 1933 and the Exchange Act of 1934.
3.0 Products and Services
Below is a description of the investment management services offered by the Hedge Fund.
3.1 Marketable Securities
Management will investments directly into marketable securities and other hedge funds that specialize in specific areas of trading. The Company intends to develop a number of trading strategies including options trading, LEAPs trading, long position/short position trading, and other methods of trading that will produce small but consistent gains on a weekly and monthly basis. The Hedge Fund may also engage a covered call strategy that would allow the fund to amply it return on investment for securities that are held for an extended period of time. In regards to investing in other hedge funds, outsourcing trading activities is expensive as hedge funds charge large AUM fees and performance fees on their aggregate capital pools.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the investment management industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this recession will continue until mid-2009, at which point the economy will begin a prolonged recovery period.
4.2 Industry Analysis
The financial services sector has become one of the fastest growing business segments in the U.S. economy. Computerized technologies allow financial firms to operate advisory and brokerage services anywhere in the country. In previous decades, most financial firms needed to be within a close proximity to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can access almost every facet of the financial markets through Internet connections and specialized trading and investment management software. With these advances, several new firms have been created to address the needs of people in rural and suburban areas. The Bureau of Labor Statistics estimates that there are approximately 94,000 investment advisors currently employed throughout the United States. The average annual income for an investment advisor is $62,700. Salaries are expected to increase at a rate of 2.1% a year as inflation increases.
4.3 Customer Profile
Unfortunately, this business (for its investors) caters only to high net worth individuals that have an aggregate income of over $200,000 (if single) or $300,000 (if the client is married) or a net worth of at least one million dollars. Strict regulatory oversights prevent the Company from marketing the hedge fund to anyone that is not considered an accredited investor. These regulations may become more stringent as the Securities and Exchange Commission moves to have greater regulatory oversight over the hedge fund industry.
4.4 Competitive Analysis
As the investment advisory and hedge fund industries have grown, so has the level of competition. One of the drawbacks to the industry is that there are very low barriers to entry. Any individual or business may register itself as an investment advisor after completing the proper examinations and filings. The expected costs to build an investment advisory are low as it is a service oriented business. There are more than 8,000 other private investment groups that operate in a similar capacity.
5.0 Marketing Plan
The Hedge Fund intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Hedge Fund.
5.1 Marketing Objectives
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
• Establish relationships with other investment advisories within the United States.
5.2 Marketing Strategies
As the Company cannot directly market its services to the general public, the Hedge Fund will hire a capital introduction firm to showcase the operations of the business to potential investors. These firms, for a commission, will introduce potential investors and investment groups to Management. These companies maintain extensive lists of accredited investors and institutions that frequently make investments into private investment companies. The Hedge Fund will also develop a website specifically for investors that have registered or have become clients with the Company. This website will showcase the strategies that the Company uses, relevant contact information, and for registered inventors – information specifically related to their account. Mr. Doe will also make presentations at popular hedge fund conventions while concurrently obtaining speaking engagements among other investment meetings so that his visibility and that of the firm increase over time.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or
key employee, you should provide a brief biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• The Owner will acquire $10,000,000 of equity funds to develop the business.
• The Company will earn a compounded annual return of 30% on its investment portfolio.
• The Hedge Fund will have an annual revenue growth rate of 16% per year.
7.2 Sensitivity Analysis
It is the goal of the Company to make investments in economically viable companies that will produce dividend income, interest income, and capital appreciation. During times of economic recession, the Company’s portfolio may have issues with profit generation, which in turn, could lead to lower ROI’s on the Hedge Fund’s portfolio. However, the Company intends to use a number of investment strategies that will ensure that the firm will produce profits regardless of the general economic climate.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis