A fundraising mandate is the formal agreement between a fund manager and a placement agent that authorizes the agent to raise capital on the GP’s behalf. It defines who the agent can approach, what they are paid, how long the engagement lasts, and the boundaries of the relationship. Getting the mandate right matters because it governs a partnership that can make or break a fundraise.
The core components of a mandate are scope, exclusivity, compensation, and term. Scope defines which LP segments or geographies the agent covers. A global mandate gives the agent responsibility for all markets. A regional mandate might cover North American institutional investors while the GP handles European relationships directly. Some mandates are segmented by LP type, with the agent covering pension funds and endowments while the GP targets family offices through their own network.
Exclusivity is the most negotiated element. An exclusive mandate means the GP works only with that agent for the defined scope. If the GP independently raises capital from an LP in the agent’s territory, the agent may still be owed a fee. This incentivizes the agent to go all-in but limits the GP’s flexibility. A non-exclusive mandate lets the GP engage multiple agents or raise directly, but agents invest less effort when they know they are competing. The most common middle ground is geography- or segment-specific exclusivity, where the agent owns certain markets and the GP retains others.
Compensation typically follows a success fee model. The standard range is 1-2% of committed capital raised from LPs introduced or covered by the agent. Some mandates include a monthly retainer, often $10,000-25,000, that provides the agent with working capital for roadshow logistics, travel, and marketing materials. The retainer may or may not be credited against eventual success fees, depending on the negotiation.
The tail provision deserves careful attention. A tail of 12 to 24 months means the agent earns their fee on any capital commitment from an LP they introduced, even if that commitment closes after the mandate formally expires. This protects the agent against situations where they build the relationship over months, the mandate expires, and the LP commits to the fund two weeks later. Without a tail, the GP could avoid paying the fee by simply waiting. The tail length and which LPs it covers should be explicitly defined to avoid disputes.
Term length usually aligns with the expected fundraising period, typically 12 to 18 months from engagement to final close. Some mandates include performance milestones or check-in points where either party can terminate if the relationship is not working. A mandate without a termination mechanism locks the GP into a partnership that may not be delivering results.
For emerging managers, the mandate negotiation is often their first exposure to the economics of professional fundraising. Understanding the tradeoffs between exclusivity and flexibility, retainers and success fees, and short tails and long tails is essential before signing.
Frequently Asked Questions
What is the typical fee structure in a fundraising mandate?
Most placement agent mandates include a success fee of 1-2% of capital raised from LPs introduced or covered by the agent. Some mandates also include a retainer, typically $10,000-25,000 per month, that may or may not be credited against the success fee. The fee percentage often decreases for larger commitment amounts and may vary by LP type or geography.
Should a fundraising mandate be exclusive or non-exclusive?
It depends on the GP's situation. An exclusive mandate gives the agent more incentive to invest resources in the fundraise, but it also means the GP cannot engage other agents or raise independently without potentially owing fees. A non-exclusive mandate preserves flexibility but may result in less dedicated effort from the agent. Many mandates are semi-exclusive, covering specific geographies or LP segments.
How long does a typical fundraising mandate last?
Most mandates run 12 to 18 months, aligned with the expected fundraising timeline. They typically include a tail provision of 12 to 24 months, meaning the agent earns fees on commitments from LPs they introduced even if those commitments close after the mandate expires. The tail protects the agent's work in cases where LP diligence extends beyond the mandate period.
