How to Find Limited Partners for Your First Fund

Raising a first fund is one of the hardest fundraises in finance. You're asking investors to commit capital for ten years or more to a manager without a fund-level track record. Many institutional investors simply won't consider first-time funds. The ones who will are specific, findable and approachable, if you know where to look.

This guide covers which limited partners (LPs) back emerging managers, how to build a target list, what LPs want to see and how to structure the raise. It applies to first-time venture, private equity and private credit funds, though the details vary.

Who invests in first-time funds

The LP base for a first fund usually looks quite different from that of an established manager. Typical sources, roughly in order of how often they appear in first funds:

1. High-net-worth individuals, especially founders, executives and former colleagues who know you.
2. Family offices, particularly smaller single-family offices. See our guide on finding family offices.
3. Fund of funds and emerging manager programs, which exist specifically to back new managers. See our fund of funds guide.
4. Other fund managers, who sometimes invest personally in managers they respect.
5. Government and development programs, some of which commit to emerging funds to support local ecosystems.
6. Endowments and foundations, occasionally, especially those with emerging manager mandates.
7. Pension funds and insurers, rarely for a first fund, but some run emerging manager programs, often through intermediaries.

For most first-time venture funds, a large share of capital comes from individuals and family offices. Institutional capital becomes more realistic for fund two or three.

What LPs want from a first-time manager

Without a fund track record, LPs look for proxies. Be ready to address each of these:

Track record

Your track record is the core of the pitch. Present it honestly. Show every investment you made, not just the winners, with entry dates, amounts, current marks and how marks were determined. LPs will check, and cherry-picked track records damage trust immediately.

If your track record came from a previous firm, be clear about your role. "Led the investment and sat on the board" is very different from "was on the deal team".

Portfolio construction

Show how the fund will be deployed: number of companies, initial cheque sizes, reserves for follow-ons, target ownership and expected deployment pace. The model should explain how the fund can return several times its capital given realistic outcomes.

Building your LP target list

Start with three concentric circles:

Inner circle: people who know you

Former colleagues, founders you've backed or worked with, executives in your network and personal contacts with investable wealth. These people are most likely to commit early. Their commitments also give later LPs confidence.

Middle circle: one introduction away

Family offices, other GPs and wealthy individuals your inner circle can introduce you to. Ask every inner-circle LP to introduce you to two or three others.

Outer circle: institutional and programmatic LPs

Fund of funds, emerging manager programs, government programs, endowments and foundations. These take longer and need more formal materials, but they can write larger cheques.

For each potential LP, record:

• type of LP and typical commitment size,
• whether they've backed first-time funds before,
• strategy fit (stage, sector, geography),
• introduction path,
• status and next step.

Where to find LP information

• Other emerging managers. They know which LPs are active and will often share privately.
• Fund announcements that name anchor LPs.
• Public pension and endowment reports, which often list fund commitments.
• Regulatory filings. In the US, Form D filings by funds show amounts raised and number of investors, which helps you gauge the market.
• LP-focused databases if you have access.
• Emerging manager conferences and communities.

The anchor LP

The single most important milestone in a first-fund raise is the anchor: one LP committing a meaningful share of the target, often 10% to 25% or more. An anchor signals credibility and gives others confidence to commit.

Anchors sometimes ask for economic benefits in return, such as a share of the management company's revenue or carry, reduced fees, or co-investment rights. Think carefully before giving away GP economics. They can be hard to unwind and may affect future funds.

Running the raise

1. Prepare materials: pitch deck, track record schedule, portfolio construction model, draft legal terms and a data room.
2. Set a realistic target. First funds are commonly smaller than managers hope. A fund you can raise in 12 to 18 months is better than one that drags on for three years.
3. Secure your inner circle first and aim for a first close.
4. Hold a first close once you have enough commitments to start investing. This lets you build a fund track record while raising the rest.
5. Keep investing and keep reporting. Each new investment strengthens your pitch to later LPs.
6. Final close within the period allowed by your fund documents.

Fund terms for first-time managers

Standard economics are commonly around a 2% annual management fee and 20% carried interest, though first-time managers sometimes offer lower fees, fee breaks for early LPs, or other concessions. See our carried interest guide for how carry works.

Keep terms close to market norms. Unusual terms raise LP diligence costs and can slow decisions. Use experienced fund counsel.

Common first-fund mistakes

• Targeting large institutions too early and spending months in diligence processes that end in "come back for fund three".
• Setting a fund size that doesn't match the strategy.
• Giving away too much GP economics to an anchor.
• Presenting an unclear or cherry-picked track record.
• Underestimating fund operating costs.
• Stopping investing while raising, which leaves nothing new to show LPs.

Your LP pitch deck

An emerging manager deck is usually 15 to 25 slides. A structure that works for many first-time funds:

1. Summary: fund size, strategy, team, key terms and target close dates on one slide.
2. Team: who you are and why your background gives you an edge.
3. Thesis: the opportunity and why now.
4. Sourcing advantage: where your deals come from, with evidence.
5. Selection: how you decide, and examples of good calls and passes.
6. Winning: why founders or sellers choose you.
7. Value add: what you actually do after investing.
8. Track record: full, attributable, with methodology.
9. Portfolio construction: cheque sizes, reserves, ownership, number of companies.
10. Pipeline: anonymised examples of current opportunities.
11. Terms: fees, carry, GP commitment, fund life.
12. Operations: service providers, governance, reporting.

Keep it factual. LPs see many decks with impressive-sounding claims. Specific examples and verifiable numbers stand out.

Handling LP due diligence

Institutional and semi-institutional LPs often send a due diligence questionnaire covering strategy, team, track record, operations, compliance and environmental, social and governance policies. Industry templates such as ILPA's are widely used. Prepare standard answers in advance and keep a data room with your LPA, track record backup, policies, sample reports and references. Responding quickly and completely is itself a signal that you'll be an organised manager.

Managing the pipeline of LPs

Treat LP fundraising like a sales pipeline. Track every prospect by stage: identified, intro requested, first meeting, follow-up, diligence, soft-circled, committed, closed. Review it weekly. Most first-time managers find that commitments come in clusters around closing deadlines, so set clear dates for first and final closes and communicate them.