Private investment funds (whether it be a hedge fund, venture capital fund or a private equity fund) require a legal form, in order to separate the directors from the investors and the fund managers.
A hedge fund may be structured as a company (e.g. British Virgin Islands Business Company);
A PE/VC fund may be structured as a limited partnership (e.g. English Private Fund Limited Partnership);
A retail fund may be structured as a unit trust (e.g. Cayman Islands Unit Trust).
A fund platform may be structured as a protected cell company (e.g. Isle of Man Protected Cell Company).
A standard offshore company (such as a Cayman Islands Exempted Limited Company or a Bahamas International Business Company) can be set up using a standard offshore corporate services provider.
A Vanilla Company versus Fund:
As a Fund may be structured as a company, some fund managers or sponsors may consider setting a standard company instead, as opposed to a fund (for costs reasons – a vanilla company is cheaper than a fully-fledged fund).
A Fund (structured as a company) is a highly-differentiated version of a company, with specifically-tailored constitutional documentation and will ordinarily possess offering documentation.
Therefore a company set up as a standard limited company would require significant amount of adjustments (including restating and refiling the Articles of Association, working with legal counsel to prepare the fund-level Term Sheet/Private Placement Memorandum , ...), resulting in higher costs (as compared to starting with a standard fund structure).