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By contributing capital, investors become 'Limited Partners' of the fund. As such, the fund is structured as a 'Limited Partnership'.
Private equity funds are closed-end investment vehicles, which means that there is a limited window to raise funds and once this window has expired no further funds can be raised. These funds are generally formed as either a Limited Partnership (?LP?) or Limited Liability Company (?LLC?).
Most private equity funds are established as a Limited Liability Company (LLC) or a Limited Partnership (LP). This has two key benefits for Limited Partners: They can only be held liable up to the amount they personally invest in the fund. Both LLCs and LPs are considered pass-through tax entities.
A private equity firm is called a general partner (GP) and its investors that commit capital are called limited partners (LPs). Limited partners generally consist of pension funds, institutional accounts and wealthy individuals.
The tax laws that govern non-profits (such as pension funds) that often invest in VC funds make it difficult for those funds to invest in LLCs. Professional investors also generally want to see you giving stock options to employees which is much easier to do with a C-corporation (more about that below).
The bottom line is that it's probably a minimum of 10 years of full-time work experience before you can even consider starting your own PE firm. I doubt that anyone could do it successfully below the age of 35 today, and most founders are probably in their 40s or beyond.
Although a private equity fund may be advised by an adviser that is registered with the SEC, private equity funds themselves are not registered with the SEC. As a result, private equity funds are not subject to regular public disclosure requirements.
In addition to meeting the minimum investment requirements of private equity funds, you'll also need to be an accredited investor, meaning your net worth ? alone or combined with a spouse ? is over $1 million or your annual income was higher than $200,000 in each of the last two years.