Legal, Admin, Compliance: What needs to be in place before fundraising

In 2025, fundraising begins well before the pitch deck. 

As we highlighted in our last post, LPs want you to be institutionally ready on top of having a compelling investment thesis. 

But what does that really mean?

In short: Your legal documents should stand up to scrutiny, your administrative systems should function as seamlessly as possible, and your compliance framework should inspire trust. Before they even look at your IRR projections, LPs want to know: can you actually run a fund?

Here’s what you need in place before you start fundraising.

Legal: Show you’re structurally sound

LPs are paying more attention to legal structure than ever before. Amid increasing regulatory pressure and geopolitical complexity, legal frameworks can be a risk factor. It’s your job to ensure it isn’t.

Before fundraising, you need:

• A clean, auditable Limited Partnership Agreement (LPA), along with clear side letter protocols and subscription docs.
• Jurisdictional strategy: LPs are asking tough questions about domicile, especially in light of tax changes and shifting EU/US policy (only 17% cite domicile as a top issue—but for those who do, it's make-or-break).
• Legal readiness for due diligence: this includes disclosures on any pending litigation, IP ownership, service provider contracts and liability structures.

LPs increasingly expect documentation to reflect best practices in governance, conflict mitigation and regulatory alignment. If you’re vague here, they’ll likely assume that you’re not ready for institutional capital.

Admin: Get your house in order

LPs want to know you can run operations at scale. According to Bain, over $1.2 trillion in dry powder is waiting to be deployed – but the bar for operational quality is rising fast. Your fund admin setup needs to be more than “we have someone who handles that.”

Here’s what they’ll ask:

• Is your investor onboarding process structured and compliant with AML/KYC expectations?
• Are your capital calls and distributions executed cleanly, with full transparency?
• How do you handle cash management and reconciliations? Are your fund accounts segregated and independently monitored?
• Are your reporting processes automated and auditable?

A poorly structured or under-documented admin process sends LPs running, especially at a time when cash management oversight ranks as a top concern for 46% of investors (PEI, LPGP Dynamic). Make them stick around by covering your admin bases.

Compliance: Build it before you need it

This is where many emerging GPs fall short. They assume compliance is a burden for later. But today, compliance is part of the pitch.

Cybersecurity is the clearest example: 47% of LPs say it’s a critical due diligence issue. 

Investors want to know:

• Have you implemented endpoint protection, multi-factor authentication and penetration testing?
• Is your cybersecurity response plan in place and tested?
• Are your vendors audited for risk exposure?

But compliance doesn’t stop at cyber. The SEC’s updated marketing rule and ESG disclosure expectations mean GPs must also:

• Archive performance materials and ensure calculations conform to ILPA best practices.
• Ensure all regulatory filings – like Form ADV or PF – are current and complete.
• Implement internal policies for fee transparency, conflicts of interest and ESG alignment (especially for SFDR Article 8 or 9 funds).

When LPs see that your compliance is proactive, they’re more likely to trust you with their capital.

The Institutional Readiness Mindset

In 2025, LPs are scrutinizing emerging managers just as closely as they are mega-funds – sometimes more. Why? Because you don’t yet have the benefit of legacy trust or long-term relationships. What you do have is the chance to demonstrate foresight, professionalism and control from the very start.

Your GP pre-fundraise checklist

• Legal documents reviewed by outside counsel and formatted for LP diligence
• Segregated fund accounts and clear treasury controls
• Defined onboarding and AML/KYC process
• Archived marketing and performance data
• ESG policy, framework and – ideally – external assurance
• Pen-tested cyber protection and formal compliance documentation
  
  

Get these right before you fundraise, and you’ll signal that you’re not an emerging manager trying to look institutional. You already are.