• Third Party Administrator Selection and Oversight – Evaluate the pros and cons of in–sourced versus outsourced fund administration and determine oversight protocols if the decision is made to outsource.

   

• Independent Auditor – Retain a reputable firm that has meaningful experience auditing the asset class/companies within the industry in which the firm intends to invest.

   

• Deal Execution – Develop a deal execution process and governance framework with Accounting, Treasury, Investment, Legal, and Administrative teams. 

• Fund Accounting Policies and Processes – Select an accounting general ledger system based on relevancy to investment type(s) and set up a chart of accounts.

   

• Valuation Policies – Establish formal written valuation policies that require investments to be marked at fair value.

   

• Corporate Reporting Data Requirements – Develop a list of required corporate reporting data to evaluate the business’ profitability, forecast future revenues and expenses, and consider strategic investments and expenditures.

• Banking Relationships – Evaluate banking partners and determine whether to diversify exposure across multiple counterparties.

   

• Capital Call Policy – Establish a capital call policy at the outset that can be referenced in LP pitch meetings so that LPs know what to expect once fund has launched.

   

• Fund Financing – If fund financing is necessary, consider a subscription line which can provide an immediate source of funding.

Evaluate what fund tax reporting/compliance requirements should be documented in the LPA, including estimated tax reporting if final information cannot be completed before the extension deadline. 

Establish processes and controls to provide information reporting as required by law, such as 1099 reporting, FBAR filing obligations, 1042/8805 filings, and FATCA/CRS obligations and registrations. 

Ensure the LPA allows the GP to receive tax distributions in the event taxable carried interest precedes economic carried interest. 

• IT Support – Hire appropriate IT support to ensure the ability to service your clients and run your business, including selecting a managed service provider.

   

• Personalized Domain Name – Purchase a personalized domain name and attach it to the firm’s web presence and email service.

   

• Web Hosting and Email Hosting Provider – Choose both a web hosting and email hosting provider to ensure public websites and email services are accessible and secure. 

• Cybersecurity Staffing Needs – Consider partnering with consultants and managed service providers on cybersecurity.

   

• Cybersecurity Policies – Create cybersecurity policies to act as the foundation of the organization and to share with LPs during operational due diligence.

   

• Cybersecurity Awareness Training – Create and implement cybersecurity awareness and training to ensure employees are aware of how to protect firm content and educated on basic best practices.

• Contact Management/CRM System – Develop a proper contact management/CRM system. The same platform can often be used for Deal Pipeline tracking as well as CRM. 

   

• Valuation Tracker – Create a valuation tracker to have transparency into underlying investment valuations in a timely matter that aligns with investment professionals’ needs.  
  
  
• Accounting System – Build or license an accounting system. Ensure there is a proper in-house general ledger developed if it is not being handled by a third-party administrator.

• ESG Policy – Develop formal ESG policy with specific coverage of relevant topics and key considerations.
  
  
• ESG Oversight – Develop a clear oversight structure for managing ESG and impact governance.
  
  
• ESG Initiatives – Develop a formal and recurring training ESG/Impact program for all employees.  

• Investment Process Integration – Clearly define how ESG is integrated into the investment process (from sourcing to post-close).
  
  
• ESG Reporting and Labeling – Decide what measurement and reporting capabilities are needed and consider handling internally or outsourcing. Consider positive/negative implications of fundraising on any industry ESG labels (such as SFDR).
  
  
• Climate Analysis – Consider climate analysis in the due diligence and monitoring process (from sourcing to post-close).

• Defining Capital and Investor Needs – Determine capital and deal financing requirements and target relationships with qualified investors. 
  
  
• Mapping the Market – Identify a target group of LPs who invest with emerging managers and/or independent sponsors.
  
  
• Narrowing Down the Universe – Identify high-priority and realistic targets during capital formation planning. 

• Follow-on Meeting with Broader Attendees – Define a strategy for secondary/follow-up meetings between the investment team and potential LPs.
  
  
• Due Diligence Questionnaire (DDQ) – Create a DDQ to allow LPs to develop areas of further focus and discussion points during diligence process.
  
  
• References – Develop a list of specific references to provide insights into GP operations/performance from the perspective of relevant investors, operators, advisors, and other relevant stakeholders.

• Subscription Package/Onboarding – Establish processes and provide assistance across key focus areas for LPs to help complete required documentation and regulatory requirements (AML, KYC, etc.)
  
  
•  Legal Diligence/Negotiation –Understand relevant LP-specific legal needs and considerations.

   

• Target Closing Dates – Establish a regular schedule for the Fund to accept LPs/capital commitments to help streamline operations.

• Staffing/Compliance Consultant – Consider if/when to engage a CCO who is dedicated to compliance.

   

• Registration with SEC/Local Regulator – Determine what resources are needed to assist with SEC registration process (legal counsel, compliance consultant, etc.).

   

• Compliance Manual – Create formal policies and procedures to address SEC requirements and any additional relevant focus areas. 

• Compliance Review – Consider if/when to engage a third-party to assist with annual compliance review.

   

• Employee Training – Consider if/when to engage a third-party to assist with compliance training.

   

• Compliance Monitoring Software/Email Review – Assess when compliance and email review software should be implemented.

Consider best practices/approach for forming separate legal entities for the management company (investment adviser), general partner, and fund. 

Develop agreements governing the management company/GP entities (economic and governance arrangements, employee agreements, etc.). 

Work with legal/tax advisors to establish the ideal fund structure to enable increased LP investment opportunity access.