What is Warehousing (Warehoused Deals)?
Warehousing means making investments before a fund closes — held personally, by the management company, or via SPVs — with the intention of transferring them into the fund once it closes. Emerging managers use warehoused deals to show LPs a live portfolio rather than an empty thesis.
For a first-time manager, the hardest part of fundraising is asking LPs to underwrite a blind pool with no evidence. Warehousing solves this: the GP invests in companies during the raise — using personal capital, an SPV, or a line from an anchor — and offers them to the fund at cost (or cost plus a modest carrying charge) after the close. LPs effectively buy into a seeded portfolio they can diligence company by company.
The mechanics need careful handling in the LPA: transfer pricing (cost vs. marked-up valuation), which deals the fund is obligated to take, and conflicts disclosure all get negotiated. Done well, warehoused deals de-risk the pitch and demonstrate real deal flow; done carelessly — especially transfers at marked-up valuations into the fund — they become a diligence red flag.
Also known as: warehoused investments, deal warehousing