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

For emerging managers, the steps from idea to first close can feel daunting. Beyond raising capital, you’re navigating complex legal structures, balancing LP expectations, and making decisions that will affect your firm for years. Having the right legal partner can mean the difference between a smooth launch and costly missteps.

I recently sat down with Orrick Partners Dolph Hellman and Ken Rasamny to unpack the most common fund formation questions GPs face. From selecting counsel to negotiating side letters, their guidance reveals what it really takes to get from first draft to first close.

Responses have been edited for clarity and length. The full conversation can be found here.

When should managers bring in counsel?

Ken: The earlier, the better. Ideally, you have the right legal partner in place before you start marketing to LPs. Fund formation is specialized, so you need a lawyer who understands your asset class, tax structuring, and SEC compliance. Hiring the wrong type of lawyer (for example, a PE lawyer for a VC fund) can create cost overruns and structural misalignment. Beyond compliance, having a top-tier firm at your side signals credibility to LPs.

Dolph: GPs also rely heavily on legal counsel for side letters as they tend to be where things get tricky. Your Fund I LPA sets the template for every fund after, and it’s hard to walk back concessions once they’re in. Getting strategic advice on side letters protects your flexibility for Fund II and beyond.

What are common mistakes a first-time fund manager could make?

Dolph: The biggest mistake is “giving away the farm” to land an anchor LP. Anchors often want a stake not just in your first fund but also in Fund II and Fund III. Concessions you make for these LPs can stick with you for years, so you want to be very thoughtful about what you agree to. Another common pitfall is underestimating how long it takes to turn a meeting into a commitment. Institutional LPs rarely invest on the first or second call. It often takes months of relationship-building. Raising capital is a marathon, not a sprint.

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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