The Democratization of General Partners

The days of large, blind pool private equity investing are quickly fading.

The exclusive club of traditional investment management has, for decades, required a mix of:

·     Deep pockets and extensive capital connections (HNW individuals, family offices, pension funds and private endowments) to raise millions (and billions) in LP capital.

·     Expert understanding of complex financial and regulatory and legal frameworks

·     Understanding of deal structures, including debt and equity for profitably structuring deals that align with Limited Partner (LP)goals

In short, barriers to entry in financial understanding, connections and expertise have limited any true expert within a niche to establish a foothold as a fund general partner.

However, we are now witnessing a paradigm shift in how GPs are created and how they operate. Advances in technology and the growing use ofSpecial Purpose Vehicles (SPVs) are democratizing access to this once-exclusiverole.

These innovations have drastically lowered the barriers for aspiring fund managers, enabling the creation of GPs in smaller, more flexible structures tailored to specific investment opportunities. 

Instead of one-to-many, funds are morphing into one-to-one (i.e.one fund to one specific targeted deal) via a properly-structured SPV.

This has several key advantages:

·     The new era of GPs are able to stay within their lane and invest directly in the areas, niches and geographies where they have the deepest expertise and can add the greatest value to LPs.

·     It forces discipline on a deal-by-deal basis. No longer will GPs buy into a mediocre deal knowing that they are beholden to an investment mandate that actually may misaligned with LP incentives when dealsare done because money needs to be put to work.

·     The 19 components of both set-up and management of the SPVs themselves are now streamlined and automated (KYC, AML, AccreditedInvestor Checks) for optimal time management on the GP side

This transformation isn’t just about making it easier to launch a fund—it’s about permanently changing the landscape of private investing altogether.

It’s enabling a more diverse array of individuals, ideas, and investment strategies to enter the market, fundamentally reshaping the traditional power dynamics of private equity and venture capital.

Traditional GP Model: Barriers to Entry

Historically, becoming a General Partner (GP) in the private equity or venture capital space was an exclusive achievement reserved for the well-connected and well-capitalized.

The traditional GP model operates within the framework of large, multi-deal funds requiring significant upfront resources and long-term commitments.

For decades, this exclusivity has acted as a barrier to entry, restricting opportunities for emerging managers and smaller investors.

Capital Requirements

One of the most significant obstacles for aspiring GPs is the substantial capital needed to launch and manage a fund.

Raising millions—or even billions—of dollars from limited partners (LPs) typically requires a track record of success in prior funds, leaving first-time managers at a distinct disadvantage.

Additionally, GPs often need to contribute a meaningful amount of their own capital, adding to the financial burden particularly for those who could likely make waves on the small fund size.

Network Dependence

Building a traditional fund (whether in private equity, real estate or venture capital) also relies heavily on access to a network of high-net-worth individuals, family offices, and institutional investors.

Without the right relationships, historical track-record or the credibility to secure meetings with key stakeholders, many would-be GPs struggle to get their ideas off the ground.

Most niche experts would never even think of “being their ownGP” as an eventual career option in the first place.

Operational and Regulatory Complexity

Running a fund involves navigating a maze of legal, regulatory, and operational challenges.

From SEC compliance to fund administration, GPs must manage complex processes requiring specialized knowledge and expensive legal or administrative support.

For smaller teams or individuals, the upfront time and cost of establishing these systems are often insurmountable.

This represents a formidable barrier to entry, keeping out smaller potentially lucrative opportunities.

Limited Diversity and Innovation

These barriers not only restrict access but also limit the diversity of ideas and strategies within the investment ecosystem.

Emerging managers with unique perspectives—whether based on geography, demographics, or niche sectors—are often excluded from the table, leaving the market dominated by larger, established players most of whom are targeting so-called mega-deals.

The traditional GP model has long been defined by its exclusivity. While this framework has contributed to the rise of some of the most successful funds in history, it has also created a system that is resistant to change and innovation.

However, as technology advances and alternative investment structures gain traction, this once-closed system is beginning to open up.

The rise of SPVs and accessible platforms marks a turning point, challenging the traditional barriers to becoming a GP and fostering amore inclusive and dynamic investment landscape.

It’s not necessarily the case that SPVs are new.

No, they have been around for decades, but their creation and management for use as a tool in smaller, private funds has been limited at best.

Until now.

Technology’s Role in Democratizing GPs

Platforms like SPV.co (shameless self promotion), AngelList,Assure (now defunct), Carta, and similar tools have become game-changers fore merging GPs.

These platforms simplify the process of creating and managing Special Purpose Vehicles (SPVs) and funds, offering a user-friendly interface for tasks that were once prohibitively complex.  

From structuring deals to managing compliance, these tools provide a turnkey solution for launching investment vehicles.

This has allowed individuals with strong deal-making skills in M&A and VC, but limited resources (capital and know-how) to break into the world of “being a GP” themselves.

Streamlining Compliance and Administration

SPV software service providers offer automated workflows for legal documentation, investor onboarding, and reporting.

By reducing costs and complexity, these tools empower GPs to focus on sourcing deals and managing investments rather than being bogged down by administrative burdens.

Expanding Accessibility for Limited Partners

Technology doesn’t just benefit GPs—it also democratizes access for limited partners (LPs).

Online platforms provide LPs with transparency and a broader range of investment options, often allowing them to participate in smaller-scale funds that align with their specific interests.

This creates a more dynamic and engaged investor ecosystem, further supporting the growth of new GPs.

Multiple pooled SPVs that still keep the capital stack clean also allow for smaller, individual investment minimums, allowing GPs to diversify in placing their bets across multiple, varied projects.

Lowering Costs and Increasing Scalability

The cost-efficiency of technology has made it possible forGPs to operate at a smaller scale without sacrificing quality.

SPVs and micro-funds, powered by technology, can be managed with a fraction of the resources once required. T

his scalability has opened doors for niche GPs focused on specific sectors, geographies, or investment theses that might not attract larger funds.

We believe the next generation of fund managers will be vastly different than those of the past:

·     More niche-specific focused GPs based on geography or market segment will emerge

·     Greater access to a wider range of investment options for LPs, allowing them to place smaller bets across a wide range of market segments, spreading risk but still providing investment exposure to abroad swath of markets.

·     More entities, deals and opportunities for LPs to invest in what they know and love

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