Snook, Green isn't the way to go.
$5mm gives you a critical mass to do it right. Even if you plan on staying small, you should shoot for 'best practices' from the get go. If you do well and begin receiving institutional interest the fact that you used hallmark firms will serve you well in the due diligence process.
Fund organizational fees can be amortized over three years which reduces the impact on the expense ratio.
Hire a solid top tier hallmark law firm, spend your money on a small retainer, these firms will draft an agreement whereby they will await the balance due when the fund launches and raises capital.
You can decide to have the partnership itself bear the fees, you can decide to give the investors a break and bear the expenses on the management company level, or split them.
Once the fund is up an running the legal fees tend to decline and the tax and audit fees become a larger item.
The fund 's returns along with money in/money out are audited; the management company simply needs a CPA for return filings and K1s to limiteds.
Form a limited liability company as the manager, sponsor, general partner.
The management company then forms, organizes the partnership.
Legal=Formation, organization, secretary of state filings for an LLC and a LP.
The top tier firms get all this done between 10-15k.
An audit runs around 7K and isn't necessary until the fund is running for 10 months or so.
There are a half dozen firms that own the space. The money spent is well worth it, if you do well, your law firm will introduce you to fund of fund it represents. Dont underweight the networking benefits of having Sadis & Goldberg, Sullivan Cromwell, or a Paul Hastings.
