Happy Thursday and welcome to another edition of Beyond TVPI.

Last week, I wrote about Axcel VIII and a fundraise that reached its hard cap in less than six months. If you wanted a seat, the relationship work needed to start well before the fund opened.

There is another shape of fundraise that asks something different of an LP. A substantial group commits early. Another substantial group comes in near the end, after the fund has started investing.

Kohlberg Fund X offers a useful public example. We will go through the anatomy of the fundraise to ask a question I would want any LP to answer: when does going early make sense, and what would justify waiting?

Founders Corner this week is all personal.

Thank you for reading,

Steffen

When I started as an LP, I was used to funds raising 60% to 70% at the first close. A few smaller closes followed. Most of the capital was already in place, and the rest arrived in a drip.

I now see more raises with two heavy ends (also confirmed by placement agents and other LPs I’ve spoken to). The first close brings in a meaningful base, often including large existing LPs. Then the GP starts investing while it keeps fundraising. As the final deadline approaches, another large group signs. The two groups are now often roughly the same size.

I call this the Barbell fundraise.

Early investors underwrite the manager and the proposed fund. Later investors can also examine the first deal or two. They may have a better idea of how those companies are tracking, though the evidence will still be thin. If they want into this vintage, the final close is their last chance.

Note: I have invested in several earlier Kohlberg funds, but I have no inside view of the Fund X raise. Everything that follows is from public information only.

Kohlberg Fund X had its first recorded sale on 18 November 2022. In June 2023, Kohlberg announced an agreement to acquire Riveron. The deal completed in July, and a Fund X investor later identified Riveron as the fund's first portfolio company.

By 17 November 2023, SEC filings reported $2.531 billion of commitments across Fund X's parallel vehicles. In July 2024, the New York State Common Retirement Fund disclosed that a $300 million Fund X commitment had closed. Kohlberg announced the final close at $4.3 billion on 13 September 2024, plus about $1 billion for dedicated co-investment vehicles.

The gap between the November 2023 snapshot and the final close is roughly $1.77 billion, or 41% of the final fund size.

The SEC filings do not tell us how much came in at the first close or at any individual later close. What we can see is fundraising continuing after the first investment, with a substantial commitment still being made as late as July 2024.

For an LP with a firm view on the manager, joining the first close may be right. The GP gets capital and certainty.

The LP secures access before the portfolio exists and before the final allocation becomes a scramble. The LP may also have more influence over the LPA and a better chance of an LPAC seat.

For a less certain LP, the months after the first close can be useful. Riveron gave a later Fund X investor a real company to underwrite. The LP could ask how it fitted Kohlberg's thesis, what had happened since signing and what the GP had learnt.

One deal cannot prove a fund, but it can change the questions.

Seeing a deal is only part of the appeal of waiting. If Riveron was tracking well around 14 months after the acquisition, a late LP could buy into that progress at cost plus equalisation interest. The early LPs took the original underwriting risk without that evidence. That is the option the late LP holds.

The main trade-off is access - especially for large LPs. A later LP may get more evidence and still lose its place if the fund fills. With Axcel last week, if you expected a barbell raise you probably lost out on the commitment.

I would decide before the first close what evidence would earn a yes.

And yes, I have lost allocations by getting the situation wrong.

This pattern also creates a problem for GPs. If an LP can wait, watch the first investment and then enter at cost plus interest, why take the extra uncertainty at the first close?

A GP that wants a stronger first close should consider a more meaningful early-close discount or a higher equalisation interest charge for later entrants. The early LP carried the risk before anyone knew how the first deal was tracking.

That is the broader lesson from these two fundraises. Identify the shape of the raise, then position for it - whether you are a GP or an LP.

Going early secures your commitment and a voice in the terms. Waiting buys evidence, but it may cost you the commitment.

Both have a price. The point is to know which one you are paying before the first close.

Staying close to a manager makes those questions easier to answer. After each meeting, I want a record of what changed, what still concerns me and when we agreed to speak again. By the time the fund opens, that history should tell me whether I have enough conviction for the first close or need to wait for more evidence.

That is the work we built FundFrame's Investment CRM for. It keeps GP meeting notes, relationship history and follow-ups together, so the decision does not depend on someone remembering a conversation from a year ago.

I debated whether to put this in here. But it is my corner, so here it goes.

This week, we said goodbye to our beloved dog Max. I'm not gonna bore you with all the details about what a good boy he was (but he was a very good boy).

Instead, a little story.

We got Max at the same time I started my first full-time job in investment banking. I was newly graduated, working 60+ hours a week, and thought there was very little overlap between having a dog and that particular job. So for almost six months, I didn't mention Max at work.

When I finally did, my colleagues thought it was great. Most of them loved dogs. I heard "Why didn't you tell us before?" and "Tell me if you need a sitter." Many of them got to know Max as well.

Max was with us for more than 13 years. That's longer than it took me to go from my first day of school to graduating high school.

We miss him.

This newsletter is written by Steffen Risager, the founder of FundFrame, a platform for LPs to manage their private markets investments.

Before that, Steffen was CIO at Advantage Investment Partners, a Danish Fund-of-Funds.

Steffen has a decade of experience as an LP, and has made commitments totalling approx. $6bn across fund- and co-investments.