When Is an Emerging Manager an Established One?

The US holiday season is now in full swing, which, for those in the alternative investment industry, brings with it a degree of freneticism. In the hedge fund space, redemptions to realise gains (or losses) for the fiscal year tend to tick up, and in the private markets space, dealmakers are frantically trying to get deals over the line before the Christmas and New Year break. 

And there will be plenty of those dotting the i’s and crossing the t’s on the paperwork necessary for them to launch a new firm and/or fund in Q1. 

For the 2025 cohort of emerging managers, regardless of whether they run a hedge, private debt, private equity, real estate, or venture capital fund, one commonality will be that the typical one will have only a handful of people on staff (on a good day). 

So, when they hit the asset raising trail in the new year, one objection that they will hit, which will come early on as well, is: How are you going to do everything you need to with such a skeleton crew? 

The answer – something along the lines of “we will just work really hard” – would have been fine a few years ago, but not now. Funds need a roadmap – a believable, realistic one – which has numerous fail safes built in, like key person insurance, to satisfy a potential investor. 

But using a middle and back-office platform can help an emerging manager out on the asset raising trail counter these objections.  

The first reason why is that the marketing pitch changes. You’re no longer a start-up with $10mn in assets from friends and family. You’re part of a bigger group, with a longer track record across multiple asset classes and strategies, with access to a much larger universe of middle and back-office support across accounting, compliance, fund administration, legal, and tax. 

The second reason is the improved check and balance built-in to the relationship with the platform provider. Sometimes, the provider becomes the manager of the fund, and the management team the Series advisor (akin to sub-advisor). That means the platform has some level of oversight, which makes it make sure that the manager is doing what they say they will be doing; that’s reassurance for the investor. 

The third relates to the aforementioned key person risk. If something happens to the or one of the key persons, the platform provider can install a replacement so that business as usual is maintained. 

There is much more to raising money from sophisticated investors than this, of course. A successful track record – and some evidence that prior successes are sustainable – is key, as is the fit with what the investor is looking for at the time. But, from an operations standpoint, when is an emerging manager an established one?  

When they use a middle and back-office platform provider.  

Happy Holidays. 

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Gregory Poapst is a Managing Partner at Fundviews Capital. Connect with him on LinkedIn here.

Fundviews Capital is a full-service end-to-end Fund Management Platform.  Our platform provides a complete end-to-end solution for asset managers or wealth managers to structure, launch, operate and grow their professional investment funds. You can launch a fund in a matter of weeks, not months, and with minimal capital outlay – not only reducing the risk of launching a fund but also maximizing your chance of success. Once launched, you will find that a dedicated team of professionals is just a phone call or email away at all times, handling all aspects of the back and middle office for your fund.