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How to launch a fund

For first-time managers and teams spinning out of a larger firm: what a launch involves, in the order it usually happens, what each service provider does, and how long each part tends to take. Private equity, venture, credit, real estate and the rest follow much the same path.

The stages

  1. 1.
    Strategy and track record

    Before a fund has a name or a lawyer, it needs a reason for an investor to commit: a clear strategy and evidence that the team can carry it out. This is where most of the work of a first fund is decided.

    Often six months or more before formation begins, and for a spin-out, the time it takes to leave cleanly. 7 items on its checklist.

  2. 2.
    Structure and documents

    Most US private funds are built from the same few parts. Fund counsel puts them together for your strategy and your investors; knowing the parts makes their questions, and their bill, easier to follow.

    Commonly two to four months for the documents, often run alongside early fundraising. 8 items on its checklist.

  3. 3.
    Service providers

    A new fund hires out most of its back office. Investors look closely at who the providers are, because they are part of how a first-time manager shows it can be trusted with money. Here is what each one does.

    Counsel first, the rest chosen before the first close. 7 items on its checklist.

  4. 4.
    Fundraising

    Raising a first fund is the longest stage and the one most launches underestimate. It is usually raised from people and institutions who already know the team, before it reaches investors who do not.

    Commonly twelve to twenty-four months from first meetings to final close, and often longer. 7 items on its checklist.

  5. 5.
    First close

    The first close is the day the fund legally exists with investors in it. The investment period and the management fee usually start here, and the fund can begin to invest. Everything that runs the fund has to work from this day.

    The last few weeks before the date are the busiest; later investors join at subsequent closes, usually within twelve to eighteen months. 7 items on its checklist.

  6. 6.
    Running the fund

    After the first close the work becomes a calendar: calls and distributions as deals happen, statements every quarter, an audit and tax returns every year, and a compliance programme that runs all the time.

    Ongoing, for the life of the fund, often ten years or more. 7 items on its checklist.

How long it takes

A first fund commonly takes one to two years from the first investor meeting to the final close, and the work before that can take as long again. These are typical ranges, not promises: an anchor investor can shorten them, a hard market can double them.

Typical time each stage of a fund launch takes
StageTypical time
Strategy and track recordSix months or more before formation
Structure and documentsTwo to four months, often alongside early fundraising
Service providersCounsel first; the rest before the first close
FundraisingCommonly twelve to twenty-four months to final close
First closeThe busiest few weeks; later closes within twelve to eighteen months
Running the fundThe life of the fund, often ten years or more

The checklist

Each stage ends with its own checklist. All 43 items are also on one page you can print.

Recent first funds in the news

Closes and launches of managers’ first funds, from our reporting.

All fundraising news

Talk to someone who has done it

Tell us what you are launching and what you need. We will introduce you to lawyers, auditors, tax advisers or a manager who has raised a first fund. Free, and we take no referral fees from anyone.

Ask for an introduction

This guide explains how fund launches commonly work. It is not legal, tax or investment advice: rules differ by fund, investor and place, and change. Speak to your own lawyers and tax advisers before you act.