Illinois offers one of the most favorable environments for hedge fund formation in the United States. The state follows federal guidelines without adding burdensome state-specific requirements, making it straightforward to launch and operate a fund.
This guide walks you through the simple 5-step process to launch your Illinois hedge fund, from document generation to fund operations.
5 Simple Steps to Launch Your Fund
Generate Documents
FreeGenerate documents using Hedgia for Illinois. These documents are completely free whether you decide to use Hedgia or not.
Create LLCs
Hedgia creates the Illinois LLCs for you.
Create Accounts
Hedgia helps create the bank and brokerage accounts for your fund. Hedgia will file all the necessary forms with the SEC and state.
Invite Investors
Invite your investors to a convenient and simple sign-on experience.
Start Your Fund
Hedgia will take care of all accounting, redemptions, fee calculations etc.
Illinois Requirements at a Glance
Detailed Legal Requirements
Rule 506(b) Private Placement
Accept up to 35 non-accredited investors alongside unlimited accredited investors
- •Non-accredited investors must be 'sophisticated' - having sufficient financial knowledge
- •No general solicitation or advertising permitted
- •Enhanced disclosure requirements for non-accredited investors
- •Must provide financial statements and offering documents before sale
Illinois 5-Client Exemption
Avoid state registration with 5 or fewer Illinois clients
- •A hedge fund LLC/LP counts as one client, not individual investors
- •Institutional clients often don't count toward the limit
- •Must not hold out to the public as an investment adviser
- •Exemption found in Illinois Administrative Code
Fund Size Thresholds
Different requirements based on assets under management
- •$25M-$100M: Form ADV filed with SEC (exempt reporting adviser)
- •$100M-$150M: Private fund adviser exemption
- •$150M+: Full SEC registration required
100 Investor Limit
Avoid Investment Company Act registration
- •Maximum 100 beneficial owners to use 3(c)(1) exemption
- •No public offering of securities permitted
- •Allows operation as private investment partnership
Accepting Non-Accredited Investors
Illinois hedge funds can include non-accredited investors through Rule 506(b), allowing you to accept investments from friends, family, and your broader network. However, there are important size-based restrictions to consider.
Fund Size Restrictions
Under $20M: Can have non-accredited investors
$20M+: Must remove all non-accredited investors from the fund
Sophistication Standard
Each non-accredited investor must have sufficient knowledge and experience in financial matters to evaluate the investment.
Enhanced Disclosure
Must provide comprehensive disclosure documents including financial statements to non-accredited investors before sale, provided with Hedgia for free.
Numerical Limits
Maximum of 35 non-accredited investors in any 90-day period. 100 total investors max.
The Bottom Line
Illinois provides one of the most straightforward paths to launching a hedge fund. With minimal costs ($50 setup if funded with $10k within 90 days + $30/month), no mandatory audits, and clear exemptions from registration requirements, you can focus on what matters: your investment strategy.
Hedgia handles all the complex operational requirements - from document generation to tax preparation - so you can launch your Illinois hedge fund in 5-15 days, not months.