Where should your first fund live, and what should you buy once it does?

Two decisions sit at the front of every first fund, and they are usually made in the wrong order. Where the fund is domiciled gets decided early, often by whichever counsel is in the room. What infrastructure the fund actually runs on gets decided late, in pieces, under time pressure before a first close. The second decision costs more and is harder to reverse.

What the market chooses

The concentration is striking. In the 2026 AIMA and Marex Stacking Up emerging manager survey, covering 180 managers and 50 institutional investors, 56% of respondents domiciled their flagship fund in Cayman and 16% in the US. Two jurisdictions account for roughly seven in ten first funds. Cayman itself finished the second quarter of 2026 with 31,145 funds domiciled there, 18,132 private funds and 13,013 mutual funds, on CIMA’s own figures.

Jersey is the smaller, more specialised comparison. The JFSC’s latest published statistics put total fund net asset value at £465.9bn across 608 funds, with private equity and venture the largest single category at £219.7bn. Those figures are as at 30 June 2025, the most recent the JFSC has published, so treat them as direction rather than currency.

Four questions that settle domicile

Where are your LPs,  what are they already comfortable signing and what are their tax priorities? Domicile is a distribution decision . An allocator with an existing Cayman operations process will move faster on a Cayman vehicle than on a better-argued alternative.

Where do you intend to market, and under what regime? Marketing into the UK or EU brings its own requirements regardless of where the fund sits. Even within the EU, each member state may have its own specific requirements. Answer this before you pick.

What happens at fund two? Changing domicile between funds is possible and expensive. Choose the one you can repeat.

The second decision, and the one that often gets rushed

Once domiciled, a fund needs a manager with the right permission, someone to hold the assets, someone to keep the record of who owns what, an administrator to run the books and something for LPs to log into. Most first funds buy those from five different providers: a law firm, a third-party AIFM, a custodian, a fund administrator and a portal. Five contracts, five renewal dates and, quietly, a reconciliation burden between them that nobody prices at the outset.

The regulatory context is changing here. FCA CP26/28, published in July 2026, proposes a small AIFM tier for firms whose aggregate AIF net asset value is £750m or less, with medium up to £5bn and large above it. It would abolish the small registered route, so managers who operate on a registration-only basis today would need authorisation. It is a consultation, closing 14 October 2026, with implementation currently envisaged for 2028.

Your records will be examined

In July the FCA also published findings after engaging with 242 asset management and alternatives firms on financial crime controls, and it singled out firms active in private markets as carrying materially higher inherent risk. Around 40% of firms outsource customer due diligence, but only 36% of those had full oversight of the third party doing it. Roughly a fifth had no complete business-wide risk assessment.

Read that as a buyer’s warning. Outsourcing the work does not outsource the accountability, and a stack assembled from five providers is a stack where nobody owns the answer when a regulator asks who verified what.

Sequence it: vehicles before a fund

The cheapest way through both decisions is not to make them at once. Run two to four deal specific vehicles first. You build the LP relationships, the KYC records and the deal history you will need anyway, and you learn what your operating model actually has to do before you commit to a structure that is expensive to unwind. Allocators are meeting that halfway: the same survey puts their average minimum fund size at around US$94m, down from US$106m in 2024, and 72% said they would consider firms managing under US$100m.

What this means for how you buy

Domicile is a decision you make once and live with. Infrastructure is a decision you can stage. That is the logic behind the FlowwFunds tiers: start with fund and investor tooling, add regulated custody when the ownership record needs to be somewhere defensible, add the full transaction and payments layer when the fund is running capital calls and distributions at volume. Same platform throughout, so there is no switching and no re-onboarding as you move between them.

Decide domicile with your LPs and your marketing plan in front of you. Decide infrastructure by what you will need at fund two, then buy the tier you need now.

Floww Markets Limited is authorised and regulated by the Financial Conduct Authority (FRN 980098). This article is for information purposes only. It is not financial, investment, legal or regulatory advice and it does not constitute a financial promotion of any investment. Capital at risk when investing in private markets.