The Firm Behind the Fund: Rethinking How Banks Serve Emerging Managers

As fund finance grows into a trillion-dollar market, Piermont Bank is doubling down on emerging managers with an integrated proposition: finance the fund, bank the firm and build a relationship that can grow with both.

By Barbara Fleming, Head of Fund Finance, Piermont Bank

Fund finance reached an important milestone in 2026.

In April, Moody's reported that the global fund finance market had surpassed $1 trillion, driven in part by the rapid expansion of private credit. What began primarily as a liquidity tool for private funds has evolved into a significant and increasingly sophisticated financing market, spanning subscription facilities, NAV financing, hybrid structures, and other forms of liquidity.

But underneath that growth is a very different story for many emerging managers.

Fundraising has become more challenging, while capital increasingly concentrates around the largest, most established firms. According to Carta research, capital raised by private equity funds declined 24% in 2025 and down by 37% for venture capital. Although VC fundraising strengthened in early 2026, more than three-quarters of the capital raised in the first quarter went to just six mega-funds. Lower middle market private equity fundraising also fell more than 43% in 2025, to $94.8 billion, the weakest year since 2018.

Yet there are strong signs that new managers are embracing new opportunities and strategies. Carta recorded 78 venture funds between $10 million and $100 million closing in Q1 2026, up 34% from the prior year. Emerging managers raising smaller, specialized funds and differentiated strategies continue to attract Limited Partners (LP) demand even in a highly concentrated environment.

That contrast matters. Fundraising cycles have stretched - often well over a year- leaving many managers with working capital, banking infrastructure and liquidity needs that can arise long before a fund ever reaches its first close.

It raises a fundamental question for those of us serving this market: Are we here to finance the funds only, or help managers build a firm?

Emerging managers don't need a smaller version of an institutional bank. They need a bank willing to understand the institution they are building.

Having worked in fund finance since 2009, I've watched the market transform firsthand. Managers today have access to a far broader set of financing tools and capital sources than a decade ago. But emerging managers don't simply need another credit product. What they need are banking partners who take the time to understand the businesses being built, and who stay engaged as those businesses evolve.

A professionalized on-ramp for the next generation of managers

Today emerging managers no longer have to figure it out alone.

A growing ecosystem of accelerators and fellowships - VC Lab/Decile, Kauffman Fellows, NVCA's Venture Forward, Recast Capital's Enablement Program - now compresses the traditional roadmap that used to take a manager years of trial and error into months of structured guidance on fund mechanics, LP relationship building and operational infrastructure. That's real progress and it's raised the bar on what a well-prepared "first-time" manager looks like walking into a fundraise.

Banking deserves that same intentionality as taking a well-formed fund to market - it should be on the roadmap early, in place well before the fund's first close, and meet the needs of the firm, not just the fund.

Despite that professionalization, too many lenders still default to an outdated read on what "emerging" means. We treat it as the reason to show up early.

Emerging managers need a bank that understands where they're going

Emerging managers are often defined by what they haven't built yet: fewer fund vintages, smaller AUM, a shorter standalone track record or less institutionalized operating infrastructure.

My experience often proves that this bias is misplaced. "Emerging" alone doesn't tell a lender enough.

I've worked with first- and second-time managers who bring decades of investment experience, strong LP relationships, disciplined fund structures, and highly developed investment strategies. Understanding their creditworthiness requires looking deeper: Who are the Limited Partners? How is the LPA structured? What experience does the team bring? What is the investment strategy? How has the manager performed? And, importantly, what is the firm trying to become?

At Piermont, that advisory mindset is fundamental to how we approach all managers, not just emerging managers - it shapes how we underwrite, how we structure, and how we show up in a relationship long before any facility closes.

It also reflects a broader philosophy that has shaped the bank since its founding: innovative and fast-growing businesses shouldn't have to fit themselves into a one-size-fits-all banking model. A banking partner should invest the time to understand the business, where it is today and where it intends to go.

As Piermont Founder and CEO Wendy Cai-Lee has noted, emerging managers can derive particular value from a lender relationship because their needs often extend beyond capital to strategic, operational, and digital support. That philosophy is built into how Piermont operates, not just how it markets itself. It is just one reason I chose to build this practice here.

Banking the firm means going beyond the fund facility.

Fund finance naturally centers on the fund's subscription facility itself: the structure, borrowing base, covenants, pricing, and execution.

Those things matter enormously. But they aren't the entirety of the client's capital and banking needs.

Behind every fund is a management company. Behind that management company are people, operating expenses, deposits, payments, cash flows, service providers, and technology. As the firm grows, those needs become more complex.

So when a manager comes to Piermont for a capital call line, the conversation doesn't stop there.

Piermont can support managers through a broader set of banking capabilities - from FDIC-insured multi-million-dollar depository services and treasury management to payments and liquidity management.

That's what banking the firm looks like in practice - not simply financing the fund in front of us but understanding the full relationship surrounding it.

"The line between the role of banks and role of non-bank lenders is blurring. That means that we, as banks, must find ways to differentiate and add value. We believe the key value creation is beyond the loan itself."

- Wendy Cai-Lee, Founder and CEO, Piermont Bank

I've watched that line blur over the course of my career. As private credit lenders, insurers and structured vehicles become more active alongside traditional banks, the question becomes: What does a bank offer that another source of capital doesn't?

For me, the answer was never just capital. The right bank becomes the financial infrastructure of the firm, not simply the provider of a fund financing facility - the credit line, plus deposits, treasury management, payments, technology, advice, and a relationship built to last for years.

Financing should evolve with the fund and the firm

The growing range of fund finance products is also giving managers more flexibility across the fund lifecycle.

Early on, a subscription or capital call facility can help manage the timing between investments and capital calls. As a portfolio matures and uncalled commitments decline, NAV-based financing may become relevant for different liquidity needs. Hybrid structures can draw on characteristics of both, while management company facilities and GP/co-invest financing address distinct needs at the firm and GP-level needs.

Not every manager needs every product. The right solution depends on where the fund - and the firm - is in its journey.

That makes foresight important.

A financing decision in year five can be affected by choices made when a fund was formed. Borrowing provisions in the LPA can determine what options are available later. Structuring with optionality in mind helps prevent a manager from unintentionally limiting future flexibility.

I've seen managers look back and wish they'd structured differently if only they had anticipated future needs. A true banking partner spot those issues before they become pain points.

Two considerations are particularly important:

• Structuring for optionality, not just for today. The LPA provisions that matter most to a lender - borrowing authority, concentration limits, and LP default rights and remedies- are often establish at formation. An experienced fund finance partner pressure-test those provisions early, so a manager isn't unnecessarily boxed our of a NAV facility or a hybrid structure later.
• Sizing the relationship to grow, not just to close. A capital call facility that fits a $30 million Fund I can become a constraint by Fund III. Syndication capability lets a facility scale alongside the manager, rather than forcing a disruptive re-platforming to a new bank at the exact moment a firm can least afford it - right when it's raising a larger fund, hiring, or entering a new strategy.

Experienced bankers as valuable copilots

The expansion of NAV financing illustrates how quickly the market continues to evolve. The 2026 Haynes Boone Fund Finance report found 72% of respondents expect moderate to significant growth in institutional NAV activity this year, a broader range of capital providers is contributing to increasingly tailored financing structures.

Innovation creates options. But it also raises new questions.

Managers need to consider the purpose of leverage, economics, structure, LP expectations, transparency and how a financing decision fits within the fund's broader strategy.

That is why I believe the best fund finance relationships aren't purely transactional.

Sometimes the most valuable conversation isn't about a term sheet. It's about whether the LPA provides sufficient flexibility. Or how an LP base may affect borrowing capacity, whether execution certainty matters more than a few basis points or whether a different financing structure would better solve the underlying problem.

A banker who has seen these decisions play out across funds and market cycles should be a resource not simply a source of capital.

That advisory relationship can be particularly valuable for emerging managers establishing many of these institutional capabilities for the first time, or for the established manager with expanding needs.

A partner to the fund, the firm, and the administrator behind both

Many of those capabilities aren't built in-house. They run through a fund administrator - the platform handling capital calls, LP reporting, cash movement, and compliance.

As a result, banking infrastructure and fund administration are increasingly interconnected. Capital-call processing, payments, fund financing, and treasury management that once sat apart are converging into a more connected operational layer.

For Piermont, that creates a natural extension of how we work with managers directly: understand the infrastructure a business actually runs on and build the relationship around it.

Our leading-edge embedded banking capabilities let us plug directly into the platforms fund administrators already provide to their GP clients.

AngelList is one example - Piermont has supported their banking and payments infrastructure since 2021, and we're now extending that relationship into fund capital call lines of credit. The result is a single relationship that supports both the manager's and administrator's banking needs.

Given how much of the industry now operates through fund administrators, this relationship is one of the more vitally important to the fund finance ecosystem.

Piermont Bank: A partner for managers to grow with, not just start with

As successor fund sizes increase, so does the complexity of what a manager needs from a bank. Structures become more sophisticated. Treasury requirements expand. Management companies needs evolve. Inevitably, the case for new financing options emerge.

That's the journey Piermont is built for, with a track record to back it: subscription facilities that continue to evolve, NAV and hybrid financing, understanding today's broader mix of LP capital sources, technology increasingly connecting banking with fund operations - giving managers more choices than ever about how, where and from whom they get financing and treasury services.

Amid all that innovation, Piermont Bank's commitment remains constant: to be the right fit for the fund, and the right partner for the firm the manager is building.

That means providing capital when it makes sense; offering customizable financing as needs evolve; supporting the broader relationship through deposits, treasury management, payments and embedded banking capabilities; and putting experienced bankers around the table who understand not just the transaction, but the manager and the firm the fund.

Ultimately, our job isn't simply to finance the next fund. It's to help bank the firm that may build many more.