Topic hub
Fundraising
Fundraising is the process by which a private fund manager markets a new fund, negotiates its terms and accepts binding capital commitments at one or more closings. This hub covers the stages of a fundraise, the offering documents, the securities rules on private fund offerings, the intermediaries involved, and investor reporting after the close.
Sections follow a fundraise from launch to final close: the process (first close, target fund size, hard cap, oversubscription); documents (private placement memorandum, subscription agreement, DDQ); offering rules (Regulation D, accredited investor); and investor reporting after the close. Placement agents are listed with the process.
Not in this hub: the fund terms negotiated during a raise, which are in Fund terms and economics, and how investors evaluate a manager, which is in Due diligence. Sales playbooks are not part of this reference.
Reference index
Fundraising process and intermediaries
6 concepts- Fundraising Period
- First Close
- Final Close
The final close is the last date on which a fund admits new investors or accepts increased commitments, after which total commitments are fixed and later entrants can join only by acquiring existing interests.
- Hard Cap
A hard cap is the maximum aggregate commitments a fund may accept, fixed in its limited partnership agreement or offering terms, which the general partner cannot exceed without the consent the agreement requires.
- Oversubscription
- Placement Agent
Offering documents
5 concepts- Private Placement Memorandum
- Subscription Agreement
- Limited Partnership Agreement
- Side Letter
- Due Diligence Questionnaire (DDQ)
A due diligence questionnaire (DDQ) is a set of written questions, answered by an investment manager and backed by documents, on its firm, strategy, team, track record, fund terms, operations, compliance and ESG, used to assess and compare managers.
Offering rules
4 concepts- Regulation D
- Rule 506(b) vs Rule 506(c)
Rule 506(b) and Rule 506(c) are the two Regulation D exemptions for unlimited-size US private offerings: 506(b) prohibits general solicitation but allows up to 35 sophisticated non-accredited purchasers; 506(c) permits general solicitation if every purchaser is a verified accredited investor.
- Accredited Investor
- Qualified Purchaser (QP)
A qualified purchaser (QP) is an investor meeting Investment Company Act section 2(a)(51)(A), chiefly by owning at least $5 million in investments (individuals, family companies) or $25 million invested on a discretionary basis (other persons).
Investor relations and reporting
1 concept- ILPA Reporting Template
The Institutional Limited Partners Association (ILPA) Reporting Template is the association's standard format for a private equity fund's quarterly report of fees, expenses, offsets and carried interest to its limited partners, set within a partner capital account roll-forward.