By Jack Standen, Managing Director, International Funds
U.S. fund managers are facing a new reality: re-ups are stalling, timelines are stretching, and investor allocations are tighter than ever. If your next close depends on finding new capital, it may be time to look across the Atlantic. Here’s how to access European Economic Area (EEA) investors while staying compliant with overseas regulators.
For decades, many U.S. funds didn’t need to look beyond domestic borders. There was ample capital at home, compliance requirements were familiar, and raising a fund meant tapping a network that likely knew your name.
But in recent years, access to U.S. capital has become more competitive. Liquidity limitations and more selective allocations are prompting U.S. fund managers – especially in private credit and real assets – to look to Europe for their next capital raise.
If you’re eyeing Europe for your next funding round, you don’t need to become a compliance expert overnight. In this guide, we’ll explore the compliant pathways to reaching European investors, including how to choose the right approach based on who you’re targeting, how much you’re raising, and where your investors are based.
Why U.S. fund managers are turning to European capital
- U.S. capital access is tightening, and LPs are increasingly selective in their allocations
- Fundraiaing timelines are getting longer. Slower re-ups, cautious institutional decision-making, and limited liquidity are making it more challenging to hit target closes on schedule
- The European investor base is active and diversified, particularly pension schemes, insurers, family offices, and retail wealth channels. For many EEA allocators, the timing is right
If you’re thinking about raising funds outside the U.S., now is a great time – but don’t go in blind. With regulators taking a harder line on fund marketing in recent years, structure matters as much as strategy.
How to legally market your fund in Europe: 3 distribution pathways
#1: Reverse solicitation
#2: National Private Placement Regimes (NPPR)
#3: AIFMD marketing passport
A cost-effective alternative to AIFMD: Self-managed EU funds via NPPR
If you’re not raising enough capital to justify a full AIFMD structure but still need an EU vehicle, a self-managed fund may be the solution. This structure provides EU investors with the structure they expect, while still using NPPR to market into compliant jurisdictions.
This setup is ideal if:
- You have individual investors who won’t commit to non-EU vehicles
- You’re targeting ~€25–50M in commitments from the EU
- You don’t necessarily need a full-suite vendor provision like a full AIFMD structure
Want to reach retail investors in Europe? Consider ELTIF 2.0
If you want to reach retail wealth channels such as life insurance providers or pension schemes, you’ll need a different model. The updated European Long-Term Investment Fund (ELTIF 2.0) regime, which took effect in January 2024, allows non-professional investors to access private markets through a regulated, semi-liquid fund structure.
Why ELTIF matters:
- Designed for retail capital access
- No regulatory minimum investment required for investors
- Ideal for long-term strategies in private credit, infrastructure, and real assets
While ELTIFs are subject to AIFMD, they unlock a distribution channel that NPPR and traditional AIFMD structures cannot.
Do you need to comply with SFDR? What fund managers should know
If you’re marketing into the EU, whether you use NPPR, AIFMD or ELTIF, you’ll also need to comply with Sustainable Finance Disclosure Regulation (SFDR).
SFDR requirements include:
- Pre-contractual disclosures in your private placement memorandum (PPM) or standalone documents
- Categorization of your fund (Article 6, 8 or 9)
- Periodic reporting on sustainability risks and ESG factors
- Clear rationale if ESG is deemed not relevant to your strategy
While Article 6 funds require only basic disclosures, Article 8 and 9 funds face stricter ESG-related obligations, particularly if you’re marketing to sustainability-focused investors.
Frequently asked questions
Why can’t I use reverse solicitation to market my fund in Europe?
Can I market an existing U.S. or Cayman fund to European investors?
Why is now a good time to raise capital in Europe?
How IQ-EQ can help
As a global investor services firm, third-party AIFM, depositary, and regulatory compliance partner with decades of experience across the EEA, IQ-EQ can help you:
- Navigate the EU marketing and distribution rules in your chosen jurisdiction(s)
- Comply with NPPR, AIFMD, ELTIF, SFDR and Annex IV requirements
- Maintain full control of portfolio management while outsourcing the regulatory burden
Need support accessing European investors? Our global compliance team can guide you through every step to keep you compliant. Get in touch today to find out more.
