From First Draft to First Close: Navigating Fund Formation with Orrick

How should managers set timeline and fundraising expectations with LPs?

Ken: Don’t rush to a first close with too little committed. You want at least a third of your target lined up so you can execute your strategy even if you don’t fully subscribe the fund. It’s better to be conservative on target size and exceed expectations than to aim too high and fall short.

Dolph: And remember: investors expect a business rationale for your target. A $100M first-time fund without a track record can raise questions about whether you can sensibly deploy and monitor that much capital. Sometimes it’s smarter to raise smaller, build a track record, and then expand in Fund II.

How should emerging managers prepare for institutional investors?

Dolph: Understand the gatekeeper process. Pension funds and large institutions hire consultants to vet managers, and they often won’t commit until you’ve proven yourself over multiple funds. Still, your Fund I documents should be strong enough to withstand institutional scrutiny, meaning robust LP remedies, clear indemnification, and a sound distribution waterfall. Some institutions also require specific documents like a Private Placement Memorandum (PPM), which can add cost and complexity. Even if you’re not targeting them today, building Fund I with institutional standards in mind sets you up for success later.

Ken: I’d also add that you should be ready for alignment questions. Institutional LPs will ask how much of your own capital you’re contributing, how you’ll dedicate your time, and how you’ll handle conflicts. Having crisp answers here builds trust.

What advice do you give first-time managers preparing for institutional LP meetings?

Dolph: Be yourself. Don’t oversell. Institutional investors are investing in you as much as your thesis. Credibility comes from honesty and consistency.

Ken: Differentiate clearly. Show how you source, pick, and win, even without distributions or highlight portfolio momentum. And if you’re leaving another fund, clarify attribution early to avoid disputes that could derail your raise.

Conclusion

Fund formation is about more than documents; it’s about setting the foundation for an enduring firm. The choices you make in Fund I (counsel, terms, investor relationships, and more) echo into Fund II and beyond.

For more guidance on fund formation and to watch the full conversation with Orrick, you can access the recording here or watch below.

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