The private equity fundraising process runs from the day a general partner decides to raise to the final close a year or two later, and it has more stages than the pipeline page on this site describes because it includes the preparation before the first meeting and the closes after the first one. This page walks the process in order: what is prepared, what a first close needs, how subsequent closes bring in later investors on equal terms, and what the record has to hold at each stage so the final close does not start with a reconciliation. The figures are the worked examples from this site's worksheets.
Preparation: the documents and the target
Before the first meeting the fund has a private placement memorandum, a limited partnership agreement, a subscription agreement and a data room, all of them counsel's work. It also has a target size and a minimum first close, which are the general partner's decisions and the numbers the whole process is measured against. The record at this stage is empty of commitments and full of prospects: every institution the partners intend to approach, with an owner and a first-meeting date, so the raise can be read as a list rather than as a feeling.
The first close: the minimum, the commitments and the first call
A first close happens when signed commitments reach the minimum the agreement sets, and it is the moment the fund exists in the sense that matters: it can now call capital. On this site's worked example a fund closes on ten million dollars of commitments and its first calls take paid-in capital to six and a half million, sixty-five percent of the total, with three and a half million uncalled. Every investor who signed at the first close is a commitment row from that day, and every later figure on the letter is a fraction of the sum of those rows.
Subsequent closes: later investors on equal terms
Investors who commit after the first close join on the same terms as if they had been there from the start, which means they are called for their share of everything already called, usually with interest, so that all investors stand at the same percentage called. The record has to handle this: a new commitment added after two calls generates an equalising call to the new investor, and the fund-level paid-in and every investor's called-to-date agree afterwards. A spreadsheet handles the first close; the second close is where the record earns its place.
The final close: the number is fixed, the pipeline becomes the record
At the final close the fund's total commitments are fixed, the fundraising period ends under the agreement, and the pipeline is finished. Every row that said yes is now a commitment; every row that did not is the start of the next fund's list. From here the record's job is calls, distributions and the quarterly letter, and the private equity fundraising process is over until the next fund. A record that carried the rows through every stage hands the investor relations lead a clean list on the day; one that did not hands them a spreadsheet to rebuild.
Questions people ask about private equity fundraising process
How long does the private equity fundraising process take?
The agreement sets a fundraising period after the first close, commonly a year with a possible extension, and the time before the first close is the general partner's to spend. This site publishes no average, because an average of other funds' raises is not a fact about yours.
What is equalisation?
The call that brings a later investor to the same percentage called as the first-close investors, with interest under the agreement. The record computes it from the new commitment and the calls already made.
Does the record hold the placement memorandum and the agreement?
It holds which version each investor received and signed, with the date. The documents themselves are counsel's and live in the data room.