Chapter 10: Fund Final Close | 6-Week Countdown

Chapter 10

The Final Close Checklist

Pre-Closing Coordination: Service provider prep, legal finalization
Closing Logistics: Capital calls, banking, subscription doc management

Closing your first fund isn’t just “getting signatures and popping champagne.” It’s a tightly choreographed, audit-traceable sequence where legal, operations, banking, compliance, and investor comms all move in lockstep. Miss one dependency, an untested bank wire template, a late Form D, a vague MFN tracker, and the whole machine grinds, confidence slips, and cash sits in limbo. Cluster 11 is your playbook for turning that chaos into a smooth, LP-grade close.

Think of the six weeks before close as a production line. In the first block, you finalize the big three, LPA, PPM, subscriptions, so every fee, expense, carry, and equalization mechanic is consistent across documents. In parallel, you stand up the operating plumbing: fund admin portal live, operating and sweep accounts opened and tested, and a one-page close calendar in everyone’s inbox as legal, admin, tax, audit, IC. From there, you shift into execution mode, circulating finals to LPs and counsel, launching AML/KYC packages, dry-running capital call math, and prepping a clean investor call that answers questions once for all.

This chapter gives you the exact checklists, roles, artifacts, and timing you need to land a first close without drama, and to look institutional while you do it. Follow it step-by-step, and you’ll convert soft circles into cash in the bank, with clean books, calm LPs, and a fund that’s ready to deploy on day one.

The 6-Week Pre-Close Countdown

Week -6 to -4: Preparation Phase

Lock the documents and the operating plumbing before you chase signatures. By the start of week -6 you want clean, near-final drafts of the LPA, PPM, and subscription package with your counsel’s comments resolved; your fund admin, bank, and auditor briefed on dates; and your investor portal provisioned for test users.

Finalize LPA. Your LPA should reflect agreed economics with fees, carry, catch-up, preferred return if any, governance (IC, LPAC), expense allocation, side-letter/MFN mechanics, and equalization for subsequent closes. Counsel will also align your LPA definitions with your PPM, subs, and any side-letter forms so you don’t create technical conflicts that slow signatures.
Finalize PPM. Ensure risk factors, conflicts, valuation approach, side-letter/MFN policy, and fee/expense disclosures mirror the LPA. Treat this as the single source of truth for what you market.
Finalize subscription agreement template. Include representations (e.g., Reg D eligibility), tax forms, beneficial-owner disclosures, and e-signature blocks. In the U.S., e-signatures are widely enforceable under ESIGN/UETA; in the EU and UK, anchor to eIDAS, your investor portal provider should reflect those regimes. Add a short “E-Signature Legality” note to your data room FAQs.
Confirm fund admin (Apex, Citco, NAV, etc.) is close-ready. Have the SOW signed, portal provisioned, capital-account schema set, and a named admin contact on your closing checklist. Ask them to pre-validate your sub docs and wiring templates.
Confirm bank account setup. Open your fund operating account for fees/expenses and a sweep account for the close window; make sure signatories and online access are active and wire templates tested.

Brief service providers. Send a 1-pager with your target dates to IC members, fund admin, tax, and audit. Note your Form D filing plan so everyone knows the clock you’re on.

Week -3 to -1: Final Execution

This is your controlled sprint: circulate final documents, let LP counsel work, and clear onboarding.

Circulate final docs to all committed LPs + advisors. Give 7-10 days for their counsel’s review; keep a live Q&A log to stop duplicative questions.
AML/KYC packages go out. Include identity/beneficial-owner forms, source-of-funds attestations, and sanctions screening consents. U.S. risk guidance and a final FinCEN AML rule covering SEC-registered and certain exempt investment advisers effective Jan 1, 2028 expects documented programs with customer identification, suspicious activity monitoring, and records retention. If you’re a U.S. adviser, stand up the AML playbook now (policy, screening tools, staff training) even if your first close is before 2026.
Confirm capital call amounts and wiring instructions. Dry-run a $100 test wire with your bank and admin to confirm routing, references, and reconciliation mapping.
Schedule an LP closing call. Walk through the mechanics, AML/KYC steps, first-close equalization, and your Regulatory Calendar as Form D, state notices.

Ensure the fund admin portal is live. Provision LP logins, post the checklist, and verify e-signature flows.

Week 0: Close Execution

Send capital call notice and collect executed subscription agreements (DocuSign or equivalent). E-sign is enforceable in the U.S. (ESIGN/UETA) and broadly recognized in the EU/UK (eIDAS); keep the certificate of completion PDFs with your books/records.
Perform final AML/KYC verification and sanctions screens (OFAC/PEP). Keep evidence of screening and false-positive adjudication per OFAC’s compliance framework.
Monitor capital calls and reconcile wires against commitments and side-letter economics. Coordinate the sweep from the capital-call account to the operating account after reconciliation (commonly day 5-10, depending on your notice).

Form D + state notice prep. After your first investor has irrevocably committed the “first sale”, file Form D on EDGAR within 15 calendar days. Even though Rule 506 offerings are “covered securities” under NSMIA states can’t merit-review, most states still require notice filings/fees (often via NASAA’s EFD). Maintain a state matrix with deadlines keyed to the first in-state sale.

Legal Documentation

LPA (Limited Partnership Agreement)

This is the operating system of the fund, finish it first and make every other document conform to it. Spell out economics as management-fee schedule and step-downs; fee/expense offsets and waivers; carried-interest rate, hurdle/ preferred return if any, and catch-up mechanics; recycling rules; GP commit and clawback/escrow.

Lock governance with Investment Committee authority, quorum/majority, key-person and suspension/termination triggers, no-fault and for-cause removal, LPAC scope. Clarify expense policy as organizational vs. fund expenses; broken-deal costs; sub-line fees; co-investment expenses.

Define valuation policy reference and audit requirement. Include co-investment process, side-letter hierarchy, and MFN mechanics like class/size carve-outs and election process. Add equalization for later closings as worked example in an exhibit, excuse/opt-out rights such as ERISA, sanctions, ESG, transfer restrictions, default remedies, and reporting cadence.

Tie in subscription-line covenants with disclosure to LPs, limits, reporting and indemnities/limitations. Ensure consistent defined terms across the suite.

PPM (Private Placement Memorandum)

Treat the PPM as the single source of truth for what you’re offering and what risks investors are taking. Include a crisp strategy and market section, use of proceeds, and manager/track-record presentation with appropriate legends.

List material risks such as illiquidity, concentration, key-person, valuation, financing, regulatory, conflicts and a full conflicts discussion about cross-fund deals, co-investors, related-party vendors.

Mirror the LPA on fees/expenses and side-letter/MFN treatment. Add regulatory legends (e.g., Section 3(c)(1)/3(c)(7), Rule 506(b) or 506(c) status, “not an offer” disclaimers.

If you include performance, align to the SEC Marketing Rule: show net alongside gross for the same periods with equal prominence, state benchmarks and selection rationale, label any hypothetical/target returns, and keep substantiation files. Include tax overview, ERISA/plan-asset considerations, and a clear subscription process and timetable.

Subscription Documents

Make it easy and audit-ready. Include:

Investor questionnaires and eligibility reps with accredited/QP, 506(b) vs. 506(c) verification path
AML/KYC & beneficial-owner disclosures with sanctions/PEP acknowledgments
Tax forms as 9/W-8 series and FATCA/CRS attestations
ERISA status representations
Trivacy/GDPR and data-processing consents
Power of attorney for admits/transfers
Signature blocks supporting e-signature as ESIGN/UETA; eIDAS where relevant
And, subscription instructions, a side-letter request form, and a contact sheet for operational questions. Where you will use third-party verification for 506(c), include a consent letter template.

Speed LP counsel with a mini “document map”

Add a one-page Document Concordance that lists each key topic as fees, expenses, conflicts, valuation, MFN, equalization, sub line, reporting and points to the LPA section, the PPM page, and the Subs exhibit/question. Include a definitions cross-walk and a short change log (v1.0→final). This cuts review cycles and prevents “where does this live?” email loops.

Banking & Capital Call Mechanics

Fund operating account

Open a dedicated operating account in the fund’s name before you circulate final docs. Use it for management fees, G&A, audit/tax bills, custodial/admin fees, and working capital reserves. Put hard controls in writing: dual-approval on all outbound wires, role-based entitlements, positive pay/ACH filters, and daily balance + exception alerts to the controller and one GP. Publish a short treasury SOP covering bank cut-off times, who sets/changes templates, and how approvals escalate if a signer is traveling. Never commingle with GP or management-company cash; segregation should be audited quarterly.

Capital-call sweep account

Use a separate “inbound only” account to receive LP wires during a closing window. Mechanics should be explicit: LP wire → bank credit advice → admin reconciliation to the sub docs → scheduled sweep to the operating account. Standardize the wire narrative, for example, “Fund I – InvestorName – CommitmentID”) and require LPs to copy your admin on confirmations. Archive bank advices and admin reconciliations with your Rule 204-2 books/records and keep a breaks log (date, cause, fix) to show controls in diligence.

Capital-call line

A sub line bridges timing between commitments and wires, keeps capital calls predictable, and lets you fund small/early investments or fees without over-calling LPs, especially across rolling closes. Pricing is deal-specific; recent markets have seen stabilized margins/unused fees versus 2023. Lenders include large U.S. banks and specialist providers; post-2023 platform changes (e.g., First Republic acquired by JPMorgan; SVB operating under First Citizens) mean relationship mapping matters. Document borrowing-base mechanics as eligible commitments, exclusion of ineligible investors, advance rates and covenant tests in your data room, and disclose IRR/fee impacts and interest allocation consistent with the LPA.

Governance that passes ODD

Add a one-pager titled “Subscription Facility Guardrails”: facility cap (e.g., ≤25–50% of first-close commitments), permitted uses as fees, short-term bridge, not long-dated leverage, concentration limits, advance rates, borrowing-base tests, tenor/clean-down (if any), draw/repay approval flow, required reporting to LPs with usage, interest, days outstanding, and contingency if the line is unavailable. Pair this with a Treasury Controls Checklist with signer rotation, template review cadence, SOC 1 report on admin, annual bank service review, so examiners and LPs can see the whole control environment at a glance.

AML/KYC Procedures

Treat AML/KYC like a core control environment, not a form pack. Your program should include: a documented risk assessment with who you market to, where they’re domiciled, product risks, written policies and procedures as CIP, CDD/beneficial ownership, sanctions screening, monitoring, escalation, training with initial, and annual refreshers for all staff touching investors, and independent testing with at least annually by your admin’s audit team or a third party. In the U.S., the FinCEN investment-adviser AML rule is slated to apply broadly by Jan 1, 2028; most LPs already diligence to that standard, so stand the program up now. If you market into the EU/UK, align your policy with local regimes and include an addendum covering local list sources, KYC expectations, and reporting channels.

What you collect (and keep)

Identify: For individuals, full legal name, residential address, date of birth, nationality, government ID. For entities: formation jurisdiction, certificate/charter, register of directors/partners, LEI, and organizational charts down to natural persons.
Verify: U.S. TIN or foreign tax ID, beneficial owners, and source of funds/wealth where risk indicates, for example, liquidity events, audited financials, bank letters.
Screen: Run names and entities against sanctions as OFAC; UK HMT; EU consolidated lists, PEP lists, and adverse media. Apply the 50% rule for blocked parties, and document false-positive clearance. Re-screen on every material change, before distributions, and at a defined cadence.

Retain: Keep all onboarding data, screening results, and decision memos for at least five years after the last transaction/relationship end. Retain evidence of negative results and your exception handling.

Workflow & SLAs

Define turnaround targets: T+1 day for initial screening, T+3–5 business days to clear standard files, and a documented EDD path for higher-risk cases as PEP, complex trusts, layered ownership. Maintain a case log with timestamps, reviewer, outcome, and supporting artifacts; reviewers should sign off in your portal with an auditable trail.

Vendors & tooling

Use a platform that automates ID verification, BO look-through, and sanctions/PEP/adverse-media screening such as Vestlane, Cascade, KYC-Chain, S&P Global Investor Onboarding. Require API integration with your fund admin or investor portal so subscription status and KYC status stay in sync, and insist on SOC 2 Type II and ISO 27001 for the vendor. Don’t guess at pricing, obtain written quotes and capture them in your SOW.

Post-Close Operations (Day 1-30)

Cap table finalized and capital accounts opened; admin posts first statements to portal.

Portal access live: Include a simple “How we report” PDF aligning your packs to ILPA Reporting Template v2.0 released Jan 22, 2025 so LPs know your format and fields.

First capital call executed for management fees and start-up costs.

IC meeting on deployment with 3-5 investments queued and reserves policy.

Compliance: File Form D , on EDGAR within 15 days of first sale; prepare state blue-sky notices/fees (often via NASAA’s EFD). Do not miss this, late filings have drawn stand-alone enforcement.

Books & Records: Archive finals sent to investors and all substantiation behind claims as calculations, approvals, distribution lists. Treat every number in your deck as if exam staff will ask for its spreadsheet.

Common Closing Mistakes

Premature close before pipeline is ready. If you can’t fund initial deals within your stated window, confidence erodes. Publish a post-close deployment plan in your portal.

Incomplete AML/KYC or sanctions screening. Missing files delay capital calls and create regulatory risk. Run a pre-close KYC audit and fix gaps.

Mismatched sweep mechanics. If bank references don’t match sub docs, reconciliation becomes chaos. Standardize wire narratives and have your admin validate a test batch.

Unclear MFN/side-letter policy. Later LPs will diligence fairness. Keep a side-letter tracker and an MFN election package ready; post your MFN scope exclusions in the room.

Poor LP communication. Silence reads as disorganization. Send a Closing Day Memo: who funded, remaining wires, first IC date, and your Form D/state-notice calendar.

A practical, step-by-step closing plan you can follow

Below is the same content condensed into an operational checklist you can copy into your CRM/task board.

Week -6 (Kickoff)

LPA/PPM/subs near-final; run an internal “terms concordance” pass.
Select fund admin; sign SOW; portal sandboxed.
Banking KYC completed; operating + sweep accounts opened and tested.
Draft Regulatory Calendar (Form D + state notices matrix).

Week -5

Counsel resolves final LPA/PPM edits; side-letter template locked.
Build Equalization Memo.
Load doc finals into portal; permission test users.

Week -4

Send “Coming next” email to committed LPs: dates, AML/KYC steps, portal invite timing.
Sanctions/PEP tools configured; write your Sanctions SOP.

Week -3

Circulate final docs to LPs + their advisors; start Q&A log.
Send AML/KYC & beneficial-owner packages; schedule 1:1 walkthroughs for complex structures.

Week -2

Dry-run capital call: bank confirms template; admin tests reconciliation.
Prepare Form D shell in EDGAR; confirm who will file and sign.

Week -1

Host LP call: mechanics, equalization, regulatory calendar, and deployment plan.
Pre-close KYC audit: chase stragglers; clear PEP false positives.

Week 0 (Close)

Send capital call notice; collect executed subs.
Reconcile wires daily; trigger sweep
File Form D within 15 days of first sale; initiate state EFD notices.

Day 1–30 (Stabilize)

Finalize capital accounts; admin posts statements.
Post your ILPA v2.0-mapped reporting samples and Quarterly Pack Table of Contents.
IC meeting on first 2–3 deals; memorialize reserves policy.
Archive all books/records: finals sent + underlying calculation workpapers.

FAQ you’ll get

“Why a subscription line for Fund I?”

It smooths capital calls, allows quick funding of small early investments, and reduces administrative friction during multi-close periods. We’ve capped usage at ≤25–50% of first-close capital, documented eligible-investor tests, and will report line usage and impacts transparently. Market data shows 2024 pricing stabilized versus 2023; we’ll share lender term sheets in the room.

“Will you meet AML expectations?”

Yes, our AML/CFT program aligns to the FinCEN final rule timeline (effective 1 Jan 2028) and OFAC guidance: policy, risk assessment, CIP, sanctions screening, SAR process, training, and independent testing. We retain records per the rule and provide an AML Testing Plan in the room.

“How fast do you file Form D and state notices?”

Form D is filed on EDGAR within 15 days of first sale; state notices/fees are submitted via EFD where applicable. We maintain a state-by-state matrix in the closing folder.

“Are DocuSign signatures okay?”

In the U.S., ESIGN/UETA make e-signatures legally valid; in Europe/UK, eIDAS governs. Our portal stores certificates of completion with tamper-evident logs.

Templates to drop into your data room

Regulatory Calendar: Form D date, state notice dates, equalization example.

Capital Call SOP: notice, reconciliation, sweep, exception handling.

AML/KYC SOP + Sanctions Screening Memo: lists used, refresh cadence, escalation.

Subscription Line Fact Sheet: facility cap, advance rate, borrowing-base, reporting.

Reporting Samples mapped to ILPA Reporting Template v2.0: capital account, fees/expenses, performance legends.

Pro tips from first-time closes that went smoothly

Name a “Closing Captain”: One owner tracks every doc, wire, KYC, and follow-up.

Standardize wire narratives: “Fund I – Investor Name – Commitment ID” saves hours of detective work.

Q&A once, answer for all. Post answers in the portal and link them from the capital-call email.

Measure your cycle times. From doc circulation to wires received share a simple dashboard in your update.

Over-communicate. A short daily note such as “$X received; Y subs outstanding; Form D filed on <date>” builds trust.

Why this setup reads as “institutional” to LPs

You hit mandatory filings (Form D + state notices) on time, avoiding the category of avoidable issues that have drawn SEC scrutiny in recent years.

Your AML/KYC doesn’t feel improvised; it’s aligned with the new FinCEN adviser rule and OFAC expectations.

Your reporting mirrors ILPA v2.0, the industry’s updated standard (Jan 22, 2025), so LPs can plug your data straight into their systems.

Your subscription line has clear guardrails, and you can speak to collateral/borrowing-base mechanics using current market language.

Closing, in one page

T-6 weeks: Docs 90%+; admin/bank/portal ready; Regulatory Calendar drafted.
T-4 weeks: Finals to LPs; AML/KYC launched; test wires done.
T-2 weeks: Q&A log humming; EDGAR creds verified; state EFD accounts set.
T-1 week: LP call; pre-close KYC audit; finalize side-letter/MFN tracker.
Close week: Call notice out; subs signed; wires reconciled; sweep; Form D filed.
Day 1–30: Capital accounts; ILPA-mapped reporting samples posted; IC on first deals.

Table of Contents

The Final Close Checklist

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How to Fundraise Your First Fund in 2025

Defining Your Investment Thesis

LP Targeting: Family Offices to Fund-of-Funds

Building Your Sourcing Edge

Running Your Fundraising Process

Fund Structure: 506(b), AIFMD & ELTIF

First Close: Funnel & Metrics

US Marketing Rules & SEC Compliance

The Final Close Checklist

EU Fundraising Routes

LP Reporting & Communication

Building Your LP Data Room & DDQ

Secondaries & Continuation Funds