How to Start an Investment Company in 2024? (The Ultimate Guide)


Although establishing an investment company can be a very profitable venture, there are several factors you need to take into account before making the decision to move forward with this undertaking. In this comprehensive guide, we’ll discuss everything you need to know about how to start an investment company, so keep scrolling!

What Is an Investment Company?

An investment company is a corporation that’s in the business of investing money on behalf of its clients. Investment companies can be either public or private, with the purpose to invest, sell, and marketing funds to the public. An investment company’s primary activity is to hold and manage securities for investment purposes, making their profit by buying and selling shares, bonds, properties, and other investment tools.

There are several different types of investment companies, each with its own unique structure and purpose. If you’re interested in starting your own investment company, take a look at all the steps and requirements:

How to Start an Investment Company?

When starting an investment firm, you can’t simply register your business with your state and get started—there are a number of regulatory hoops you’ll need to jump through and specific requirements you’ll need to meet in order to establish an investment company. In this comprehensive guide, we’ll walk you through what you need to do to successfully complete this process:

1. Choose the Type of the Company

As many businesses fall under the category of “investment company”, the first step when thinking about how to start an investment firm is identifying precisely what type of company you’d like to form. The most common investment firm types are open-end and closed-end investment companies:

  • Closed-End Investment Company

This type of investment firm sells securities through a one-time public offering. When investors want to sell their holdings, they can do so on a secondary market (e.g., the stock exchange).

  • Open-End Investment Company

Unlike a closed-end investment firm, with this type of investment company, you offer stock to the general public all the time, enabling clients to acquire shares from you and then sell them back to you.

2. Consider Business Structure

After you’ve decided on starting an investment company, as well as the exact type of company you’d like to form, you’ll need to consider what business structure would best fit the company you’d like to establish. The three most common types of business structures are LLC, partnership, and corporation:

  • LLC (Limited Liability Company)

An LLC is a business structure that offers personal liability protection and tax benefits to its owners. Although the whole process of how to start an LLC investment business is easy to learn once you get familiar with how LLC companies are taxed, LLC companies might be subject to more government regulations than other types of business structures.

DID YOU KNOW: Although once you learn the LLC forming process, setting up an LLC company isn’t difficult, most people hire registered agents to do it instead. With their help, the setup takes about an hour, and they’re the ones taking care of submitting forms to the state.
  • Partnership

Creating an investment company based on partnership means the business would be owned and operated by two or more people. There are two partnership firm types: general partnership or limited partnership firms.

In a general partnership firm, all partners are equally responsible for the management and operations of the business. On the other hand, in a limited partnership, there’s one general partner who has full control over the business and is liable for all debts and losses, while the other partners are known as limited partners with no such liability.

  • Corporation

A corporation is a more complex type of company that offers more protection from personal liability to its owners. Creating an investment company of this type means the company will be owned by shareholders, who elect a board of directors to manage it. The board then hires officers to run the day-to-day operations of the corporation. One disadvantage of corporations is that they’re more expensive and time-consuming to set up than other business types.

3. Have a Business Plan

Once you’ve decided on the type of company you’d like to form, you’ll need to develop a business plan, as you can’t think about how to start a successful private investment company without outlining your strategy first.
A business plan is a document that defines the goals and objectives of your business, as well as how you plan on achieving them. Your business plan should include:

  • Description of Your Business

Identify the sort of company you’ll operate and the services you’ll provide, and establish how much capital you’ll have at start-up and your total first-year expenditures.

  • Market Analysis

Identify the other investment firms you’ll be competing with, analyze their strengths, and discuss how you plan to distinguish yourself from the competition.

  • Marketing Strategy

Identify your target consumer by age, location, gender, education, income, and other criteria. Setting up an investment company also requires discussing various marketing initiatives you’ll be taking to contact your desired audience.

  • Operations and Management

Choose your management team and discuss their backgrounds and education.

  • Financial Information

Create projected cash flows, balance sheets, and business ratios, while also predicting your sales.

If you’re seeking funding from investors or lenders, your business plan will be one of the first things they ask for. Even if you’re not seeking funding, a well-crafted business plan can help you stay on track and achieve your goals. You can either write the business plan yourself or use a top business plan software to avoid any errors.

4. Choose a Name for Your Company

Before you’ve gone through all the steps of how to start a personal investment company, you’ll need to pick a company name that will not only stand out but also be relevant to your beliefs and investing plan. Stability, honesty, and balance are all excellent values to emphasize, but make sure no other party has already taken on a similar name:

  • In the US, you can search for business entities by looking up your Secretary of State’s website.
  • You should also check to see whether the name has already been trademarked by searching the US federal trademark database.

You’ll need to have chosen the company’s name before you proceed with the next step of how to open an investment firm, which is registering your company with the state.

DID YOU KNOW: If you’re wondering how to name your LLC or another investment company type, come up with 5 or 10 names and ask your friends, family, and coworkers for their thoughts. You can also get your target clients’ opinions, but make sure that your chosen name doesn’t have any negative connotations.

5. Register Within the State

Once you’ve decided on what type of company you’d like to form and under what business structure and name, it’s time to register it within the state. Before you start an investment company, you must file Articles of Incorporation or Articles of Organization with your state’s Secretary of State. Typically, there should be printed, fill-in-the-blank forms available, but if you’re able to register online, it would speed up the approval process. In the paperwork, you’ll need to give basic information about your firms, such as the company’s headquarters and registered agent.

Another important thing to do is talk to your lawyer about your registration requirements, and proceed with registering your investment company with the federal government, if necessary. To find out whether or not starting your own investment firm will require registration with the government, read the Investment Company Registration and Regulation Package.

6. Don’t Forget About the Importance of Marketing

Before you develop your marketing strategy, consider targeting your expected clients. Clients who are more sophisticated will require a different strategy than those who are less experienced. Novice investors, for example, may be self-conscious about what they don’t know and afraid to ask questions, and this anxiety may prevent them from conducting business with you.

Create a Website

All potential investors are now internet savvy, so if you want to give the interested clients a better understanding of your business, you’ll need a website. Developing a website that explains the history of everyone in your firm and reflects your corporate image is one of the key steps how to start your own investment firm.

Tip: Our website launch checklist lists and explains everything you need to create a website from scratch, resources included.

Pick Your Media

Choose the type of media best suited to your target market. If you want to reach seasoned professionals, for example, you might place an ad in the business section of a newspaper. However, if you want to attract young people, you should advertise on the internet and use social media, keeping in mind that video is more successful in reaching millennials than text.

DID YOU KNOW: When thinking about starting an investment firm website, make sure to thoroughly consider the type of content your website will include. Potential clients may be enticed to read articles that explain investment ideas in a simple and understandable manner, which is an excellent method to establish credibility.

Key Takeaways

An investment company is a business entity that invests (instead of saves) people’s money in securities and financial instruments with the goal of earning a profit over time.
Learning how to start an investment firm requires following several steps, such as choosing the company’s type, and business structure, creating a business plan, etc.
Your company’s business plan should include a description of your business, market analysis, marketing strategy, and management and financial information.
When you’re creating a business name, try to come up with one that’s relevant to your beliefs, and stands out in the crowd.

Before Forming an Investment Company, Consider These Factors

There are a few disadvantages and limitations you should be aware of before establishing an investment company:

  • First and foremost, to establish an investment company, you must have thorough knowledge about what is an investment company, as well as a detailed understanding of the financial market so you can make smart investments and avoid losing money from your investors.
  • Secondly, the process of registering your company with the state can be complicated and time-consuming, as the SEC imposes a number of regulations on investment companies that can be costly and difficult to comply with.
  • Also, it can be difficult to raise capital for your business, since investors are often hesitant to make long or short-term investments into a new and untested business.
  • Finally, investment companies are often at a disadvantage when competing against larger and more established firms.


Despite its advantages, starting an investment company can be a very rewarding experience and a great way to build wealth over time if you make sure to follow all the steps required. If you’re willing to put in the hard work and take on the risks, then this is a business venture worth considering.


How much does it cost to start an investment firm?

The initial costs of setting up an investment company may range from $10,000 to $20,000 for covering expenses like office rent, your legal documents (including your form ADV client brochure and fee disclosure), and the fees of your vendors.

Can I set up an investment company?

As long as you have enough knowledge in this area to create a good strategy and meet the basic requirements for starting such a company, you can set it up without much difficulty. If you’re having second thoughts about the process, consider hiring a professional company to do it for you.

How does an investment company make money?

Investment companies make profit by buying and selling shares, property, bonds, cash, and other assets. Many people want to learn how to start an investment company, as these businesses earn money through management and performance fees, and through carried interest as well.

Does an investment company need a license?

To establish an investment company, you have to obtain a license, and your company must demonstrate that it will carry out active management of investments to qualify for getting one. This means the company will make decisions on what and when they will buy and sell.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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