Traditionally PE or VC fund managers have sought to attract large institutional investors as limited partners in their fund. This meant that the LPs tended to be experienced investors, and so were relatively easy to interact with and typically would raise only limited queries with an administrator. Drawdowns were usually funded on time and investors were always contactable. However with the increase in private wealth over the last couple of decades, more family offices and HNW individuals are now also looking at investing in PE or VC structures.
Some HNW investors may not be as experienced as institutional investors and, as a result, may need more looking after by an administrator. HNWs tend to be less familiar with the technicalities of a limited partnership structure and the drawdown process – so often ask more questions.
There are, however, very powerful reasons why fund managers want to involve these exceptionally well connected, highly experienced and wealthy individuals as investors. They not only add significant financial fire power but crucially HNW investors can add immense value by making vital introductions for portfolio companies, can provide strategic insight and can help with building a company’s global strategy. HNW investors are therefore an increasingly important focus for a manager during the fund-raising process.
Mainspring has developed its Investment Platform to assist fund managers with investments by HNW investors. Mainspring provides fund managers with a fully administered feeder platform through which any number of HNW investors can invest as a single LP (through a Mainspring nominee company) into a fund, under the control of the fund manager. Mainspring operates an FCA regulated custody service which is focused on private assets and holds client monies and assets on behalf of the investors. There are over 40,000 investors and advisers on this platform.
Mainspring undertakes all the fund administration and accounting, from onboarding and AML checks to drawdown management. Mainspring can hold cash on behalf of investors, ahead of drawdowns to ensure liquidity whilst protecting the main fund’s IRR. Mainspring also provides record keeping and reporting. It makes all the investment history available to investors, their advisers and the fund manager via the Mainspring client branded portal.
You can learn more about Mainspring’s Investment Platform here
If you are looking for a complementary, flexible and low cost fund structuring option, Mainspring has a solution.