Sub-scale managers fail either because they lack access to LP decision-makers, or because their materials don't survive an investment committee. The two are independent, and fixing one does nothing for the other — which is why generalist fundraising advice so often produces no result.
Diagnosing which failure mode a manager actually has
Sub-scale general partners raising a new fund tend to attribute a slow process to the market environment, when the cause is usually one of two distinct problems: they cannot get in front of the limited partners who would actually write a cheque at this fund size, or they get the meeting and the materials do not survive the investment committee that follows it.
These are diagnosed differently. An access problem shows up as a low volume of first meetings relative to the target LP universe, often concentrated among smaller or less relevant investors; a materials problem shows up as a reasonable volume of first meetings that consistently fail to progress to a second meeting or a committee memo.
Mistaking one for the other wastes a fundraising cycle: a manager with an access problem who spends the cycle refining the deck gains nothing, and a manager with a materials problem who spends the cycle building introductions burns relationships on a pitch that was not ready to be seen.
What an LP investment committee tests beyond the deck
An investment committee reviewing a sub-scale manager tests things the pitch deck typically asserts rather than proves: whether the stated track record survives attribution to the individuals still at the firm, whether the strategy described matches the deals actually done, and whether the terms on offer are consistent with what comparable managers at this fund size have accepted.
Committees at this stage are also explicitly testing organisational risk, because a sub-scale firm has fewer people and fewer redundancies than a larger platform, and the departure of one senior person can plausibly change the investment thesis the LP is being asked to fund.
A general partner preparing for this stage should assume the committee will independently verify claims rather than accept them, and should prepare the underlying evidence for attribution, terms and organisational structure before the committee asks for it rather than in response to the request.
Attribution and deal-level track record verification
Track record attribution is the exercise of establishing, deal by deal, which individuals at the firm sourced, led, and were responsible for the outcome of each investment being cited, and it becomes a central question whenever a team has moved between firms or a fund's stated performance includes deals led by people no longer present.
LPs increasingly request this at the individual level rather than accepting a fund-level track record, because a strong fund-level number driven predominantly by one partner who has since left says little about the team now raising, and committees will often ask a manager to strip out deals attributable to departed individuals to see what remains.
Preparing a clean, verifiable attribution schedule before the fundraise begins, cross-referenced against deal documents and prior fund reporting, removes a question that would otherwise surface mid-process and stall a committee's decision while the manager scrambles to reconstruct the record.
Key-person exposure and alignment terms
Sub-scale funds carry concentrated key-person risk almost by definition, since a small number of individuals typically account for sourcing, decision-making and portfolio management across the fund, and LPs will ask what happens to the fund and to their capital if one of those individuals departs during the investment period.
Alignment terms — the general partner's own commitment to the fund, the carried interest structure, the hurdle rate, and any co-investment rights offered to limited partners — are scrutinised more closely at sub-scale than at larger platforms, because a smaller commitment from the GP relative to fund size is read as a weaker signal of conviction.
A manager who has thought through succession, deputy authority and a credible GP commitment before these questions are asked presents a materially lower-risk proposition to a committee than one addressing them for the first time in response to a diligence question.
Top-ups, co-invest sleeves and SMAs as alternatives to Fund II
When a full Fund II raise is not yet achievable, several structures allow a sub-scale manager to keep deploying and building track record without waiting for a traditional close: a top-up vehicle that extends an existing fund's capacity for late-stage opportunities, a co-investment sleeve that lets select LPs invest alongside the fund on a deal-by-deal basis, or a separately managed account that gives a single large investor a bespoke mandate run by the same team.
Each of these carries different implications for dpi and tvpi reporting, fee economics and the general partner's time allocation, and choosing among them should be driven by which specific LP relationships are available and what they are prepared to commit to, rather than by which structure is fashionable.
These structures are not a substitute for solving the underlying access or materials problem identified earlier; they are a way to sustain momentum and demonstrate continued execution while that underlying problem is being fixed, which in turn improves the manager's position when a full Fund II raise is eventually launched.
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Last reviewed March 2027
Start with the structure, not the pitch.
Tell us the transaction and the timetable. If it is not something we should run, we will say so.