Fund Administration

Fund Administration for seed funds

By Mohit Garg Apr 09, 2015

The trouble is that seed funds are often smaller in their total assets under management, but not the number of limited partners. Hence, despite that they earn less in management fees, they have to still perform investor closes, commitment transfers, allocations on capital calls, quarterly NAV statements amongst the plethora of things that only a niche section of the industry, the fund administrators, understand. Unfortunately, the supply and demand mechanics have decided a price that may gobble up a significant portion of your management fees.

Private Equity Fund administration

Source: Private Equity Demystified – Second Edition

To solve this issue, we introduced Fundwave, our fund administration SaaS. With the number of small funds on an increasing trend, we realized that there has to be an automated way of doing things that have so far required expensive accountant billings. How automated you ask? Say you’re sending a capital call notice or a quarterly NAV statement. A typical fund administrator, if they are quite good at it, will take atleast 2 – 4 days to allocate, mail merge and send the reports. With Fundwave, 2 minutes is all you need to generate accurate and compliant reports that would make an institutional investor nod in appreciation. Finally, large PE fund administration software is available to everyone, leveling the playing field for access to institutional capital.

Of course, if you’re a new seed fund working out of a co-working space and have little accounting understanding in the team, you should go for a fund administrator. Ideally choose someone who is not running a spreadsheet allocation and running a mail merge everytime they are reporting for you. Manual processes are expensive not just because of the money you pay, but the reputation loss with your investors if an error occurs. Of course, I am happy to refer you to one of our fund administrator clients if you can’t do it internally with Fundwave.

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