Starting a fund is a bold and exciting endeavor, but one of the critical challenges many aspiring fund managers face is leveraging their track record from a current or one or more previous employers. A track record is more than just a list of past achievements; it is a vital tool for attracting investors and establishing credibility. Given the recent challenges in fundraising where most of the capital is going to established players in the industry, a strong track record can be the deciding factor in successfully raising capital.

For emerging fund managers, stretching every fund dollar is essential to ensure the fund operates efficiently while the General Partner (GP) builds a foundation for long-term success. While management fees and carried interest (carry) are the obvious financial lifelines for GPs, there are additional strategies to maximize resources and create supplementary revenue streams.

This is a series of posts focused to assist emerging managers raise capital, especially in this difficult environment sans private credit fund managers. In the world of private funds, "GP commitment" often stands as a critical topic in fund formation discussions. But what exactly does it mean, and why is it so significant? Let’s break it down and provide some pro tips on how to navigate this topic with investors.

Net Asset Value (NAV) loans have become an increasingly popular liquidity solution for private equity funds. These loans, secured against the residual value of a fund’s portfolio, provide flexibility for general partners (GPs) to manage cash flows, make follow-on investments or return capital to investors. However, the fiduciary duties of a GP in the context of NAV loans present a nuanced legal landscape—particularly regarding whether and how these duties can be waived.

Hypothetical performance can be a powerful tool in fund marketing, offering investors a glimpse into how a strategy might perform under specific scenarios. However, the use of hypothetical performance data is heavily scrutinized by regulators, particularly the SEC, to prevent misleading claims and ensure investor protection. In this post, we’ll explore what constitutes hypothetical performance, the rules governing its use, and best practices for compliance.

A co-investment is a direct investment made alongside a private equity or other investment fund by an investor who is also participating in the fund. Typically, co-investments are offered on a deal-by-deal basis and allow investors to participate in specific transactions without the fees and carried interest typically associated with the main fund. Co-investors will invest through a co-investment vehicle that will invest on a side-by-side basis with the main fund.