Strategy and operations decisions to bolster success when the allocation dam breaks

The private equity landscape of 2024/2025 is a complex one, marked by unprecedented challenges and opportunities. On one hand, the market has tightened, with high interest rates and macroeconomic uncertainty making fundraising more difficult.

But it’s not all doom and gloom. According to EY’s latest PE Pulse Survey, Q2 of 2024 was private equity’s strongest quarter in two years, and 76% of general partners expect deployment to increase over the next six months. Alpha opportunities are thriving in hedge funds, which have a critical role to play as alternative diversifiers.

When the log jam of capital clears, lending partners will look to send their capital into new funds—but launching a new fund involves far more than raising capital. Fund managers must navigate a maze of strategic, regulatory, operational, and administrative considerations. Effective operations and administration are critical, yet often overlooked by managers who are more focused on deal-making and portfolio management.

In this article, we’ll explore the key considerations necessary for a successful fund launch, with a focus on how operational excellence can set managers up for success in today’s ultra-competitive fundraising landscape.

Critical considerations during the capital raise period

Launching a fund requires careful planning. During the capital raise period, several factors can make or break the success of your launch:

• Fund administration: In many ways, efficient administration lays the foundation for a successful fund. Accurate reporting and clear operational workflows help build credibility with potential investors. Key considerations include entity formation, accounting infrastructure, expense allocation, and operational due diligence
• Regulatory and compliance: From advisor registration to ESG considerations, a robust compliance program is essential. Budding fund managers must establish reporting workflows, build a tech stack, and ensure that fund structuring is both compliant and tax efficient
• Technology and infrastructure: In an era of data-driven decision-making, selecting the right systems for accounting, reporting, and vendor management is a crucial step. Building the right tech stack supports seamless operations that can grow with you as your fund scales
• Investor relations: Today’s investors demand transparency and consistent communication, so creating a professional investor relations strategy is imperative for confident capital raises

Fund launch advisory to fill gaps and maximize success

Overlooking any of the considerations above can jeopardize the success of your fund, which is why many new managers work with a launch advisory partner to make their first launch a success. While new managers are likely experienced in managing outside capital, they’re often unfamiliar with the operational side of investment management.

Launch advisors provide a third-party perspective and fill critical knowledge gaps, freeing managers to focus on investment strategy and leaving skilled experts to address the operational elements of the fund.

Launch advisory partners provide specialized expertise in areas such as compliance, operational strategy, and financial modeling, all of which are often outside the core skill set of fund managers. They can identify inefficiencies or potential risks that the manager might miss, while helping ensure your fund is set up to scale.

At IQ-EQ, we assist fund managers at every stage of the lifecycle, from capital raises and fund establishment to deploying capital, monitoring investments, and realizing returns. Contact our team today to learn how IQ-EQ can help you navigate the path to a successful fund launch.

About the author

Dan is a Senior Managing Director for IQ-EQ, based in New York. With 15 years’ experience in the industry, Dan is an expert in designing next generation institutional grade trading architectures, hedge fund launch coordination, counterparty management, ensuring fund accounting best practices are adhered to, and building robust and repeatable operational processes for alternative investment advisors of all sizes. Dan graduated with degrees in Economics and Accounting from the Pennsylvania State University.