About

All About The Fund Incubator

The Fund Incubator Limited (“TFI”) provides services to fund managers who are either in the start-up phase and are not yet regulated or where they need to be structured as advisers to a regulated management company.

The company was originally set up as Caledonia Managers Limited in 2001 to help exploit investment ideas generated by leading Scottish Universities.

In 2011 it took on its first regulatory umbrella mandate – the £37m Passion Capital fund - and has thrived since. It has now helped numerous funds and fund managers to navigate the fundraising, fund management and regulatory processes.

In 2016 Caledonia was the subject of an MBO led by Stephen Geddes and Barry Lawson, two highly experienced private equity professionals who had worked closely with Caledonia for many years and developed a deep understanding of the business and the opportunities that a flexible, responsive regulatory umbrella could create.

The Fund Incubator’s regulatory umbrella provides the following services:

Start Up Fund Managers

The Fund Incubator helps resolve problems faced by first time fund managers created by the very substantial time that it takes the FCA to deal with applications. Tellinginstitutions who are ready to commit to your fund and invest that they have to wait for another 6 + months is likely to be a deal breaker!

On-going Management Services

When a fund is being organised but the promoter group isn't regulated and does not wish to be then the Fund Incubator is able to step in and act as a fund manager. The promoter group provides insight and advice to the Fund Incubator to assist with the selection and review of investments.

Governance

The Fund Incubator helps develop the experience and systems of new fund managers so that they are able to make more credible FCA applications and demonstrate to fund investors that they have a sophisticated approach to operating the fund.

 

How the Umbrella Works

umbrella-783685_1920Using the regulatory umbrella is very simple. Once your investment team has formed a new fund then The Fund Incubator (TFI) Limited is appointed under an Interim Management Agreement to be the fund manager. Members of your investment team join theinvestment committee of their fund.

Set out below are some further insights into how the umbrella works in practice.

Marketing the Fund

  1. Marketing the Fund – if you wish us to,  TFI can oversee the marketing of the fund - reviewing, approving and issuing information memorandum and fund marketing documents;
  2. Investor Due Diligence Questionnaires– investors will want to undertake due diligence and, where asked we will assist in the preparation of Investor DDQ’s.

 

Managing the Fund

As the interim fund manager we help you build a proper investment process:

  1. Work in Progress - we will agree with you regular 'Work in Progress' meetings so that we stay up to date with your plans;

  2. Investment Decisions - we will establish a dedicated investment committee for your fund. The Committee will be chaired by one of our Managing Partners and can, if you wish, contain one or more of your nominees. Such nominees will need to be approved by the FCA;

  3. Due Diligence and Deal Sourcing - When investors choose to back a team, they are backing its judgement, its trackrecord and its ability to source, assess and create great investment opportunities. Your investment team therefore uses its contacts to source deals, undertake relevant due diligence and write the necessary investment papers;

  4. KYC Checks – there is a legal obligation to undertake ‘Know Your Customer’ checks before any investment is made (or sold);

  5. Drawdown Notices - The Fund Incubator – or your fund administrator if there is one – will send out draw down notices to investors to ensure that there are adequate funds to complete a deal;

  6. Custody - Share, loan note certificates etc will be registered in the name of your fund and held either by the fund or by its fund administrator if one has been appointed;

  7. Managing the Investment - Your investors are backing your skills at managing the investment post completion notours. If the investment agreement includes rights to appoint a director we would expect to appoint one of your team; if it includes the right to visit premises or hold meetings with a portfolio company management team we would expect that you attend them. In both cases however we would expect that youkeep proper notes and keep us informed;

  8. Exiting the Investment – if an exit opportunity does emerge whilst we are still the manager then your investment team would evaluate any opportunity and prepare an investment paper recommending acceptance orrejection of the

 

Taking Control

For Start Up Fund Managers once you become FCA authorised we resign and you become the manager of your own fund. Where required the Fund Incubator can remain involved indefinitely.