The BVI benefits from a diverse offering of hedge fund products suited to everyone from the start-up manager setting up an incubator fund to established institutional fund managers with billions under management. Its pragmatic flexibility over the twenty-five years of prudent regulation has actually been a large driver for the popularity it has generated amongst the global investment funds community.
The characteristics of the products available are set out below. If you need help choosing the most suitable product for your fund, please contact us.
Incubator fund
The incubator fund is aimed at emerging managers and allows them a two year incubation or "validity" period (with an extension of up to 12 months available with permission from the Commission) to establish a track record and test its viability. During that period, the fund can operate with light regulation, very limited mandatory service providers and without having to carry out an audit.
An incubator fund must remain within the following thresholds:
Having no more than 20 investors
Each investor, having been invited to invest, must make a minimum initial investment of US$20,000
The net assets of an incubator fund must not at any time exceed US$20 million
Before the end of the validity period (or, if earlier, when it exceeds the relevant thresholds for two consecutive months) an incubator fund is required to convert to a private, professional or approved fund. If the fund determines that it is not viable to continue, it is required to wind up its operations. The incubator fund is required to conduct an audit as part of its conversion to a private or professional fund.
An incubator fund benefits from a fast track approval process, enabling it to commence business as an incubator fund two business days after submitting a complete application to the Commission.
Approved fund
The approved fund is aimed at managers looking to establish a fund with a private offering to a small group of investors on a longer term basis. An approved fund is restricted to:
Having no more than 20 investors
Having net assets which do not at any time exceed US$100 million
The approved fund has similar characteristics to the private fund recognised under SIBA, including no minimum initial investment for investors. Unlike the private fund, the approved fund is not required to appoint an auditor. It is also not required to appoint a manager or a custodian, unless it is set up as an SPC (please see below for more details). It is required to appoint an administrator to ensure there is some suitable oversight of its operations.
Like the incubator fund, the approved fund benefits from the fast track approval process, enabling it to commence business as an approved fund two business days after submitting a complete application to the Commission.
Private fund
Private funds do not have a minimum initial investment amount for each investor or any "professional" or "sophistication" test for investors. This has made them popular with start-up managers, allowing a friends and family offering.
A private fund is restricted to either:
Having no more than 50 investors, or
Only making an invitation to subscribe for or purchase fund interests on a private basis
Private funds must be recognised by the Commission before they carry on business. Historical policy guidelines issued by the Commission under the previous mutual funds regime suggested that a fund will be regarded as having commenced its business when a prospectus, or other document the purpose of which is to make an invitation to purchase or subscribe for shares of the fund, is published.
Professional fund
Professional funds are the most popular category of regulated fund and make up approximately 65 per cent of all regulated funds in the BVI. The interests in a professional fund may only be made available to "professional investors" and the minimum initial investment by each professional investor must not be less than US$100,000 (or other currency equiv...

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