Lockups can range widely among hedge funds, and can even be different from investors in the same hedge fund when implemented via side letters, with some of the more desirable hedge funds requiring multi-year lockups, especially for side vehicles that invest in less liquid instruments. The two-year period has historical reasons, in that you could avoid certain SEC requirements by setting that as your lockup. Funds also do longer lockups so that they can issue fixed-term debt rather than depending on loans from banks.
The percentage of hedge funds fund invested in illiquid investments is generally small... that's something you'd see a PE fund do (buying private companies) but in most cases, a hedge fund does not want to buy something they can't sell with a phone call. Probably the closest would be the distressed guys who might buy untradeable bonds in the hopes of converting or getting a workout.
My point was they don't (generally) have the ~7 year effective lockups associated with VC funds, where there's a staged calldown over the first 2-3 years and then you get paid back (hopefully) starting with year 5 or so.
The percentage of hedge funds fund invested in illiquid investments is generally small... that's something you'd see a PE fund do (buying private companies) but in most cases, a hedge fund does not want to buy something they can't sell with a phone call. Probably the closest would be the distressed guys who might buy untradeable bonds in the hopes of converting or getting a workout.
My point was they don't (generally) have the ~7 year effective lockups associated with VC funds, where there's a staged calldown over the first 2-3 years and then you get paid back (hopefully) starting with year 5 or so.