Subscription Agreement

A Subscription Agreement is the legal contract used by an investor to subscribe into a fund. It includes investor representations and warranties (eligibility, accreditation, authority), AML/KYC information, tax status, regulatory acknowledgments, and acceptance of the fund’s terms.

From an allocator perspective, the subscription agreement is both compliance infrastructure and execution bottleneck. Many allocations fail timing windows not because IC said no—but because subscription requirements, KYC, or entity documentation wasn’t ready.

How allocators define subscription risk drivers

Allocators evaluate subscriptions through:

• Eligibility representations: accredited/QP/QC status and evidence requirements
• AML/KYC workflow: documentation burden and timeline
• Tax forms and withholding: FATCA/CRS, W-8/W-9 and related requirements
• Authority and signatory rules: who can execute, board approvals
• Side letter linkage: how special terms are referenced and controlled
• Closing mechanics: acceptance, funding dates, and breakpoints
• Operational readiness: how smooth the onboarding process is

Allocator framing:
“Can we execute cleanly and on time—or will onboarding friction create missed closes and internal escalation?”

Where subscription agreements matter most

• first-time relationships and new entities
• complex LP structures (fund-of-funds, trusts, offshore vehicles)
• public allocators with procurement and authority requirements
• time-sensitive closes with hard funding deadlines

How subscription mechanics change outcomes

Strong onboarding:

• reduces execution risk and accelerates funding
• improves GP credibility as an institutional counterparty
• lowers back-and-forth and legal fatigue

Weak onboarding:

• delays first close participation
• increases internal friction and reputational risk
• causes “soft no” outcomes because execution becomes painful

How allocators evaluate onboarding discipline

Conviction increases when the GP:

• provides clear subscription checklists and timelines
• supports institutional KYC standards with minimal chaos
• coordinates side letter execution cleanly
• demonstrates operational maturity (admins, portals, responsiveness)

What slows allocator decision-making

• unclear KYC requirements or changing requests mid-process
• weak responsiveness from admin/legal
• side letter terms not correctly reflected in execution package
• inconsistent instructions across GP, counsel, and administrator

Common misconceptions

• “Sub docs are routine” → onboarding friction kills momentum.
• “Legal can handle it last-minute” → authority and KYC often take weeks.
• “It’s just forms” → it’s operational trust and execution competence.

Key allocator questions during diligence

• What is the exact onboarding timeline and checklist?
• Who manages KYC/AML requests (GP, admin, counsel)?
• How are side letter terms linked and controlled?
• What is the funding process and notice timing?
• What are common onboarding blockers for institutions?