Beyond NAV: Why Fund Administration Has Become a Capital Raising Strategy

How operational excellence is reshaping LP investment decisions and why fund administrators should be part of your capital raising strategy.

The fundraising landscape has fundamentally shifted. While fund managers have always focused on performance track records and investment strategies to attract capital, a new dynamic is emerging that's catching many by surprise: operational infrastructure has become a key differentiator in LP selection criteria.

Recent data reveals this isn't a minor trend - it's a seismic shift. According to Private Funds CFO, 36% of LPs now actively scrutinize operational and infrastructure capabilities during their evaluation process, up from just 22% a year prior. This represents the fastest-growing component of institutional due diligence.
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The Operational Due Diligence Revolution

What's driving this change? The answer lies in the evolution of institutional investor sophistication and risk management. Investors have learned - often through painful experience - that operational failures can be just as devastating as investment losses. From compliance breaches to cybersecurity incidents, back-office problems can destroy years of performance gains overnight.

Today's institutional investors are asking harder questions: Can this fund scale efficiently? Are their systems secure? Will they be able to handle regulatory changes? Do they have the infrastructure to support our reporting requirements?

The numbers tell the story. Over 75% of institutional investors now conduct on-site operational reviews before making commitments, according to IHS Markit. This isn't checkbox compliance - it's a strategic evaluation of whether a fund can execute on its promises.
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Three Ways Operational Excellence Accelerates Capital Commitments
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1. Frictionless Investor Experience

LPs want simplicity above all else. They expect clean onboarding processes, accurate reporting, timely statements, and data that precisely matches what was promised during the pitch. When these fundamentals are executed flawlessly, it eliminates a major source of investor hesitation.

Consider the difference: Investor A receives quarterly reports via email attachments and has to call the fund for basic account information. Investor B accesses everything through a secure, branded portal with real-time data and comprehensive audit trails. Which fund appears more institutional-ready?

A fund administrator who delivers this consistency makes your fund easier to commit to and easier to stay with. More importantly, it frees up your time to focus on what matters most - investment strategy and relationship building rather than operational firefighting.

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2. Industry Intelligence Creates Competitive Advantage

Fund administrators operating across hundreds of funds develop unique market intelligence. They see patterns in investor behavior, understand regional regulatory differences, and spot emerging compliance requirements before they become widespread issues.

This perspective becomes invaluable during fundraising. Administrators can advise on which operational elements specific LP segments prioritize, help anticipate due diligence questions, and even facilitate introductions within their network of legal advisors and placement agents.

The result is better preparation and faster feedback loops during the capital raising process.
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3. Proactive Compliance Builds Institutional Credibility

The most sophisticated approach involves addressing operational due diligence before it officially begins. Rather than scrambling to answer investor questions about cybersecurity protocols, compliance workflows, or audit procedures, leading funds demonstrate these capabilities as part of their standard operations.

When LPs see automated compliance workflows, institutional-grade security measures, and comprehensive audit trails built into day-to-day operations, it eliminates a major source of investment committee concern. The message is clear: this fund operates at institutional standards because institutional systems are embedded in everything they do.
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The Infrastructure Expectation Gap

The statistics are striking: 92% of LPs now prefer tech-enabled, independent fund administrators, according to Funds Europe. Yet many fund managers still rely on legacy systems or basic spreadsheet-based operations.

This creates a significant opportunity for funds willing to invest in modern infrastructure. While competitors struggle with manual processes and operational fire drills, funds with sophisticated systems can focus entirely on what matters most: investment performance and LP relationships.
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Rethinking the Administrator Partnership

The most successful funds are reconceptualizing their administrator relationship. Instead of viewing it as a necessary back-office cost, they're treating it as a strategic partnership that directly supports business development objectives.

This means evaluating administrators not just on pricing and basic services, but on their ability to enhance the LP experience, provide market intelligence, and demonstrate operational excellence that supports fundraising goals.

The questions become: Does this partnership make us look more institutional? Can they help us access better relationships? Will their systems impress sophisticated investors?
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The Competitive Reality

Today's fundraising environment is intensely competitive. LPs have more fund options than ever, and their selection criteria have expanded beyond traditional metrics. Operational excellence has become table stakes for accessing institutional capital.

Funds that recognize this shift early - and build their operations accordingly - gain a significant competitive advantage. They spend less time addressing operational concerns and more time discussing investment opportunities. Their fundraising processes move faster because LPs have fewer hesitations about execution capability.

At bunch, we work with over 5,000 investors, supporting 1,500+ funded assets across multiple jurisdictions. This gives us a front-row seat to what today's institutional investors actually look for - and more importantly, where fund managers fall short. We've witnessed what derails due diligence, what builds unshakeable trust, and what makes an investor say yes faster than their competitors.

The reality is this: fund administration isn't just paperwork. Done strategically, it becomes a core component of your fundraising toolkit.
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Looking Forward

The trend toward operational sophistication in fund selection will only accelerate. As investors become more experienced with technology-enabled fund operations, their expectations will continue rising. Funds that adapt early will find themselves ahead of competitors still catching up to today's standards.

The message for fund managers is clear: your operational infrastructure is no longer separate from your fundraising strategy. It's become an integral component of how investors evaluate your fund's potential for long-term success.

Ready to transform your fundraising approach? Discover how bunch helps funds close faster, communicate more effectively, and scale with institutional confidence.

Build on bunch.

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