So you want to set up an investment fund, such as a Seed Enterprise Investment Scheme ("SEIS") or Enterprise Investment Scheme ("EIS") fund, a Business Relief ("BR"), property, or an LP/GP fund.

Awesome!

You have started researching and trying to figure out how it is done. I know it can be overwhelming with all there is to read and learn.

But don't stress.

We are here to help.

One of the key questions I am sure you are asking is - how long does it take to set up and launch an investment fund? I know this because I am asked this almost every day (well, not quite, but pretty often).

The answer.

Well, it depends.

In short, while in theory it could take as little as a month, in practice it usually takes longer. Of course, it will depend on the type of investment fund you want to launch.

(For a quick summary and FAQs, see the end of this article.)

Below is a video summary of this article.

To understand how long it will take, you first need to understand what needs to be done. Typically, the following is required for most funds to get them to the launch stage:

1. Select a fund manager (such as Sapphire 😉). There are many great UK-based third-party fund managers out there (and we can recommend some if you want), but selecting the one that aligns with your ethos and that you feel comfortable working with (remember, you could be working with the manager for many years to come) can be time-consuming.  Each may have a different charging structure or sector focus. At Sapphire, our preferred model is to participate in a share of the performance fee (carried interest), as this structure directly aligns our interests with the fund’s long-term success. In contrast, some fund managers may elect to charge a higher recurring management fee (and no performance fee) or charge a substantial one-off fee at the start. Consequently, it may take time for you to decide which fund manager you are most comfortable working with. 

2. Prepare the fund documents, including the information memorandum, the key information document (KID), and the application form (although that is usually now all digitalised). In short, the more that is written, the longer it will take to read, edit, and so on. 

3. Most managers do a Section 21 review and sign off (as per the Financial Services and Markets Act 2000). A Section 21 review helps firms and fund managers comply with FSMA 2000 by ensuring their promotions are reviewed and approved by an authorised person under FCA rules, thereby allowing lawful distribution and reducing regulatory risk. It’s a fundamental gateway to ensuring investor protection and market integrity. This can be highly time-consuming as everything needs to be checked. For example, suppose the information memorandum states that the tech sector went up by 5% in 2024. In that case, the entity doing the Section 21 will need some hard evidence to demonstrate this was actually the case. The more facts in the documents, the longer it takes to check them. 

4. The fund manager will need to apply to the FCA to obtain permission to manage the fund (if it is an alternative investment fund). As we are dealing with a third party (being the FCA), the timing is somewhat of an unknown, but typically is circa two or three weeks. It can, of course, be longer if the FCA asks questions about the fund. 

5. For most funds, a custodian, nominee, or administrator (who safeguards assets and manages fund administration and operations) must be in place. Just like selecting a fund manager, this can take time to get the right fit (ask us if you need some recommendations).

6. An independent legal review of all the documents is always recommended and can be time-consuming. 

7. There may be tax issues that need to be thought through and incorporated into the documents. This can also take significant time. 

So with the above factors in mind, the following is roughly how long it should take (in our experience) to set up each type of fund (and note that this does not allow for the time taken to actually raise the money to launch the fund):

• An SEIS fund: Given its simple structure (which does not require a legal entity to be set up),  the process should take approximately a month. In our experience, it often takes two to three months. Why, you ask? Well, because by the time everyone has reviewed everything and given the go-ahead, this time has typically elapsed.

• An EIS fund: This is the same as an SEIS fund. It should take a month (but often takes two to three months to get everything together).

• A Business Relief (BR) fund: Again, hard to predict. It should be no more than two to three months. 

• A property fund: These are relatively straightforward to launch. It should not take more than two to three months.

• An LP/GP fund: Ah, this is the harder one to predict. Since a legal structure is required (the partnership agreement and legal structure have to be set up before it launches), there are a lot more legal documents to be drafted and reviewed than with an SEIS or EIS fund. A bank account also needs to be opened, which can take a long time to arrange. In our experience, this type of fund typically takes the longest to set up.

“Setting up an investment fund isn’t exactly a walk in the park—it takes a lot of prep, plenty of patience, and good teamwork. You’ve got to get into the detail, chase up paperwork, and stay on top of all the regulatory stuff, especially with the FCA. It is all common sense and provided you always put the investor first and have the right advice, you will get there. So get the right people around you early, and don't be afraid to ask questions to make sure you really, really understand the product. After all this, it is just the beginning!”

If you have other questions regarding setting up a venture fund, please do not hesitate to reach out to us (fill out this form)

Quick Reference Guide

Summary:

Setting up an investment fund in the UK typically takes two to three months, depending on fund type and complexity.

Step-by-Step Process:

1. Select a fund manager.

2. Prepare fund documents (information memorandum, KID, application form).

3. Complete Section 21 review if required (compliance check for marketing materials).

4. Appoint a custodian/administrator.
5. Carry out a legal review of the documents.

6. Address any tax considerations.

7. Apply to the FCA for fund manager approval.
8. Carry out a final review and launch the fund.

Typical Timelines by Fund Type:

Fund Type Typical Timeline: 

Frequently Asked Questions:

• What is a Section 21 review?
  A firm undertakes a Section 21 review under the Financial Services and Markets Act 2000 (FSMA 2000) because Section 21 makes it a criminal offense for unauthorised persons to communicate financial promotions, such as invitations or inducements to engage in investment activities, unless those promotions are (1) made or approved by an FCA authorised person or (2) covered by an exemption under the Financial Promotion Order. A Section 21 review is a process that verifies all marketing materials meet the standards set by UK financial regulations under the Financial Services and Markets Act 2000. This review allows marketing documents to be lawfully promoted to potential investors, ensuring that factual statements are substantiated and that disclosures align with regulatory requirements.
  
  

• What is the typical size of a first fund?
  The size of an inaugural venture capital fund can vary significantly, but first-time SEIS and EIS funds in the UK typically raise between £2 million and £10 million. Fund size is influenced by investor appetite, sector focus, target portfolio diversification, and prevailing market conditions.
  
  

• What documents are required at each stage?

  The core documentation required throughout the fund setup process includes: - Information Memorandum - Key Information Document (KID) - Application forms (often digitalised) - Section 21 compliance sign-off - FCA authorisation documentation (if applicable) - Custodian, nominee, or administrator onboarding agreements - Relevant tax structuring documentation.
  Additional supporting documents may be necessary depending on fund structure, regulatory requirements, and stakeholder needs.
  
  

• Who can invest in these funds?

  Typically, these funds are open to individuals classified as high net worth or sophisticated investors, as well as institutional investors such as family offices, venture capital firms, and corporate entities. UK regulatory requirements restrict direct investment to those who meet specific eligibility criteria under the Financial Services and Markets Act 2000. Detailed criteria may vary depending on the fund structure and regulatory classification.
  
  

• What are the typical costs?

  Typical costs for establishing and managing a venture capital fund include initial legal and structuring fees, FCA application fees (where relevant), ongoing fund administration and compliance costs, and charges associated with appointing a custodian or nominee. In addition, fund managers typically operate on a combination of annual management fees and a performance fee (carried interest). Actual cost levels depend on fund size, complexity, jurisdiction, and service provider selection, with fees clearly outlined in the fund documentation. Investors should also review expense policies and any applicable regulatory disclosures.
  
  

• Can the process be expedited?

  While some aspects of the fund setup process can be accelerated through early engagement with legal, compliance, and service provider teams, timelines are significantly influenced by regulatory review periods (particularly FCA authorisation of the fund manager) and the responsiveness of all stakeholders involved. Proactive planning and prompt submission of comprehensive documentation may help streamline specific stages, but all statutory and regulatory requirements must be thoroughly met—meaning the overall process cannot always be substantially shortened.

Next Steps:
If you would like to contact us to inquire more about how to set up an investment fund, pricing, and options, fill out this form, and we will be in touch right away.