What Actually Goes Wrong When You Change Fund Administrators

Fund administrator migrations rarely fail by losing data. They fail in small, specific, recoverable ways, and almost all of them are about meaning rather than files: balances that arrive without the detail behind them, instruments that arrive as amounts without their terms, and period boundaries that land on the wrong side of a changeover date. Every one of these is catchable before your LPs see a single statement, if somebody is looking. Here is the actual list.

Why the file transfer is not the risk

The part GPs picture as difficult is the part that is not. Documents copy across in an afternoon. The general ledger arrives as a trial balance. Capital accounts arrive per partner. Bank history arrives as a feed or a statement set. None of that is technically hard, and nobody in this industry loses a fund's records.

The risk is the opposite shape. Something arrives complete, ties perfectly, and is missing the layer underneath that you will need in four months. It looks correct on day one. It fails on the day you ask it a question.

That is why the failure modes below are worth knowing by name. You cannot check for a problem you have not named.

1. Capital accounts arrive netted

A partner's capital account is not a number. It is a running history: contributions, distributions, allocated income and expense, and for many funds an accrued carry line. Some providers hand over the ending balance and nothing else, because that is the report their system writes by default.

Load a netted balance and the ending figure ties on day one. It keeps tying. Then a partner asks how much of their balance is return of capital versus gain, or you need DPI by partner for a Fund II deck, or an auditor asks for the contribution history of a single LP. The detail is not there to answer with, and you are rebuilding history out of subscription documents and bank records months after the move, under time pressure.

What to ask for: per-partner activity by type, from inception, not balances as at the changeover date. The distinction sounds pedantic until the day it is not. Our LP reporting standards guide sets out what that detail has to support downstream.

2. SAFEs and convertible notes arrive as amounts

This is the one that is specific to venture, and it is the most common reason a generalist handover looks clean and is not.

A SAFE on the balance sheet is carried at cost. The cost is a number, and the number transfers perfectly. What has to transfer with it is the valuation cap, the discount rate, whether it is pre-money or post-money, any MFN clause, and any pro rata side rights. None of that is in a trial balance. If the incoming provider stores instruments as balances rather than as terms, the information is gone the moment nobody has the originals to hand.

It stays invisible until a portfolio company raises a priced round. Then the conversion has to be calculated, ownership restated, and the fund's position in the cap table updated. A provider that has done this a hundred times gets it right quickly. A provider that has not gets it wrong quietly.

3. The changeover date lands mid fee period

Management fees run on a schedule that has nothing to do with your changeover date. Quarterly for most funds, on fund anniversaries for some, monthly occasionally. When the changeover falls inside a period, one of two things happens.

The period gets billed twice, once by each provider, each assuming the period is theirs. That is visible, embarrassing and refundable.

Or it gets billed by nobody. That one is silent. It surfaces later as a fee the LPA says was due and the books say was never charged, which is a harder conversation than a refund.

There is a second version of this. Fee basis frequently steps down after the investment period, from committed capital to invested capital, and sometimes the rate steps down too. If the step-down date sits anywhere near your changeover, the incoming provider has to be told which basis applies, because it cannot be derived from the numbers in front of them.

4. Bank reconciliation stops at the wrong date

The outgoing provider reconciles to their own last close. The incoming provider starts from opening balances. Items in transit at the changeover belong to neither by default: a wire sent but not cleared, a capital call payment landing the day after, a fee invoice raised but unpaid.

Those items sit unreconciled, and unreconciled items do not announce themselves. They wait for audit.

The fix is unglamorous and quick: one reconciliation as at the changeover date, agreed in writing by both providers, with items in transit listed explicitly and assigned to a side.

5. Side letter terms do not travel

Side letters are legal documents that behave like accounting configuration. A reduced management fee for an anchor LP, a different carry rate, an excuse right for certain sectors, an MFN that pulls in terms granted later to somebody else.

In the outgoing provider's system, that is a setting on an investor record. In the handover, the side letter arrives as a PDF in a folder. The document moves. The setting does not.

Nothing breaks immediately. It breaks on the first live allocation or the first capital call after the move, when standard terms get applied to a partner who negotiated otherwise. That is an LP-visible error in the one document LPs read closely.

This one genuinely needs care. It needs somebody to read every side letter and reconcile it against the last allocation run, investor by investor, before anything runs live.

6. Documents copy across but lose what they were attached to

A subscription document that used to be attached to an investor record arrives as a file in a folder. A quarterly statement a partner used to pull from a portal is now in a directory nobody has given them access to.

No data is lost. Context is. Your LP logs in to the new portal and their history begins on the changeover date, which reads to them as though the fund started that day.

It is completely fixable, and it is the failure mode your LPs are most likely to notice, because it is the only one they can see from the outside. Ask specifically whether historical statements and documents are being loaded into the new portal, or only future ones.

7. Accrued carry gets re-derived rather than carried over

If your fund accrues carried interest, that accrual rests on a set of interpretations: European or deal by deal, how the preferred return compounds, what counts toward the hurdle, whether accrued carry sits inside partner capital accounts or beside them.

Hand the LPA to two competent administrators and you can get two different accrual figures from the same facts. Neither is wrong. They are different readings of an ambiguous document.

The mistake is letting the incoming provider derive a fresh number in isolation. The right move is to take the outgoing accrual as the starting point, reproduce it, and then explain any difference deliberately. An unexplained change in accrued carry lands directly in LP-visible NAV, and it is a terrible way to open a relationship with a new provider.

The single step that catches almost all of this

There is one verification that does most of the work, and it is worth insisting on.

Before anything goes live, the incoming provider rebuilds the most recent set of capital account statements from the migrated data, and compares them line by line to the statements your LPs already received. Not the ending balances. The whole statement.

Failure modes one through five and seven all show up in that comparison, because all of them change something on the face of a statement or in the detail behind it. The comparison happens in parallel with your existing books, on a date that has already been reported, with a known right answer. If a partner's figure is off, you stop and find out why while nothing is at stake.

Number six, the portal history, is the one that comparison will not catch, which is why it needs its own question.

The two that need judgement, and the five that do not

Five of these seven are checklist items. Ask for the right file, agree a date, confirm a basis, run a comparison. They are ordinary handover mechanics and a provider that does venture funds regularly will raise them before you do.

Two involve judgement: side letters and accrued carry. Both require somebody to read a document, form a view, and reconcile that view to what was reported before. Neither is dangerous. Both are the places to spend your attention, and both are reasonable things to ask a prospective provider how they handle, in those words, before you sign anything.

That is the whole risk profile. It is specific, it is short, and it is a poor reason to spend another year with a provider that is not serving your fund. The broader sequence is in our guide on how to migrate your fund administrator, and if you are working out what you should be getting from an administrator in the first place, start with the emerging manager's guide to fund administration.

If you want to talk through what a move would look like for your specific fund, including the two items above, book a 20-minute call. Flat $5,000 per fund per year, no AUM fees, and a straight answer about whether a move makes sense for you this year or next.