Incubation fund was established as a privately funded fund. Investors in such funds are usually people who are related to investors and their family members. This kind of fund allows fund managers to try different investment styles with smaller capital scale before the fund is opened or before facing formal rules and regulations.

This kind of fund has never been officially called "incubation fund", but has always been called "restricted issuance fund"

Incubation funds generally attract funds in two ways. If this fund can be successfully hatched, that is, "born", it will bring excess returns to investors. But if there is not enough return, the fund will be liquidated and "buried".

In recent years, the use of incubation funds has also caused some criticism. This is because incubation funds are not under regular management, so the return it receives may be greater than normal. When such funds are publicized to the public, they may not be able to achieve the benefits of publicity. In order to avoid problems (losses), investors must determine whether the fund is an incubation fund at first. However, this is not easy, because fund managers always try to hide the "incubation" source of funds.