The Pre-Marketing Mistake Derailing VC Fundraises

by Matias Collan, CEO of ACE Alternatives.

Editor’s Note – Andreas Munk Holm, co-founder of eu.vc

It's a poorly kept secret we've been leading feeders into top European VC funds for a while now. Navigating fund marketing regulations? Let's just say we've learned to enjoy the irony of loving something so notoriously tedious.

Championing European VC is our mission, but that comes with its own fine print. Regular listeners will recall our standard "this is not investment advice" disclaimer—a subtle nod to the fine line we constantly walk. Speaking of secrets (shh!), we're soon unveiling our very own Sauron-inspired repository of European managers—one place to rule them all, if you will 💍😏. Navigating this realm, unsurprisingly, is yet another dance with compliance.

Which brings us to today's piece, masterfully penned by our trusted friends at ACE Alternatives. Matias Collan and the Ace team have patiently guided us through this regulatory jungle, becoming key partners in both our content and events. (Having many German VC friends already relying on their expertise definitely doesn't hurt, either.)

Dive in as Matias demystifies pre-marketing regulations, transforming what many see as a compliance headache into a strategic advantage. It's essential reading for anyone serious about mastering the rules of the capital raising game.

Enjoy the read.

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In the not-so-distant past, raising capital in private markets was an art driven more by relationships than regulation. But the surge of institutional interest in alternative assets has transformed the landscape. Today, compliance isn’t just a legal requirement, it’s a core strategic consideration.

The introduction of the Cross-Border Distribution of Funds (CBDF) framework, Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 (CBDR) which took effect on August 2, 2021, has shifted the foundation of how managers communicate with investors across the EU.

For General Partners (GPs), this evolution redefines the pre-marketing phase, formerly an informal “test the waters” moment, into a tightly governed and regulated process.

Pre-marketing as strategic imperative, not a bureaucratic burden

Too many fund managers still treat regulatory obligations as mere box-ticking exercises, an afterthought to the "real work" of pitching and fundraising. This is a dangerous oversight. Today’s sophisticated Limited Partners (LPs) expect more. Compliance is no longer an administrative hurdle; it's a signal of operational maturity.

The introduction of the CBDF Directive created a unified framework across the EU for pre-marketing. This unified definition changed the game: from how GPs approach early conversations to the materials, they share, and even the timelines they operate on.

What is ‘Pre-Marketing’ and why does it matter?

Under the CBDF Marketing Rules “pre-marketing” is clearly defined as:

1. The provision of information on investment strategies or ideas

2. To prospective professional investors within the EU

3. To test interest in an EU AIF (Alternative Investment Fund) that is not yet established or registered for marketing

4. Provided the information does not amount to an offer or placement

This matters because the regulatory obligations and timelines for pre-marketing differ from those for full-scale marketing

Pre-marketing is permitted only when:

• The AIF is not yet registered for marketing

• The materials shared cannot be used to make an investment decision

• Final or draft subscription forms or definitive fund documents are excluded

These nuances make pre-marketing both a compliance minefield and a strategic opportunity. Managed properly, it allows GPs to gather valuable market intelligence and position themselves for success; all while staying within regulatory boundaries.

One of the most significant shifts under the new framework is the formal notification procedure.

GPs (or more accurately, their appointed EU AIFMs) must now notify the relevant regulatory authority within two weeks of beginning pre-marketing activities.

This notification includes:

• The countries and timeframes of pre-marketing

• A description of the activities undertaken

• The AIFs or sub-funds discussed

While this adds administrative burden, it also creates a paper trail that protects both investors and fund managers. It's a formal acknowledgment of regulatory discipline, a powerful signal to LPs conducting operational due diligence.

Germany’s implementation of ‘the 18-month trap’

Germany’s version of the rules, enshrined in Section 306b KAGB, illustrates how jurisdictional variation can trip up even well-intentioned managers. In Germany, any investor who subscribes to the fund within 18 months of pre-marketing is considered to have been “marketed to,” not just approached; triggering full AIFMD registration requirements.

This effectively invalidates the “reverse solicitation” defense, a tactic that non-EU managers have historically used to bypass local marketing rules. Now, once pre-marketing begins, the clock starts ticking and any subscription within that window carries full compliance implications.

Compliance as a due diligence differentiator

Regulatory compliance isn’t just about avoiding sanctions; it’s about standing out. Investors increasingly use compliance maturity as a proxy for broader operational sophistication.

Firms that flout or fumble compliance not only face regulatory risk, but they also erode trust, and that trust can be harder to rebuild than capital.

Consider the due diligence checklist of a top-tier LP: fund structure, performance, team and, more recently, compliance systems. A missed notification or an ambiguous investor communication can call your entire operation into question.

Forward-thinking GPs are no longer treating compliance as an afterthought. Instead, they are integrating it into the core architecture of their fundraising strategy.

Here’s how:

1. Prospective compliance planning

Regulatory strategy starts before the pitch deck. This means incorporating marketing restrictions in the timeline, materials, and messaging from day one, not retrofitting after investor interest has been piqued.

2. Cross-jurisdictional mapping

Each EU member state has its own nuances and non-compliance in one country can jeopardize your reputation across the union as a whole. Smart fund managers are creating jurisdictional matrices to track obligations, disclosures, and timing.

3. Compliance documentation systems

Every investor interaction should be documented not just for legal protection, but also to provide insights into conversion paths, interest levels, and messaging efficacy. Documentation is both shield and sword.

The global nature of capital raising means that even non-EU AIFMs cannot afford to ignore EU rules

If a fund is being marketed in the EU, even under national private placement regimes (NPPRs), it is effectively bound by the spirit of these regulations.

To pre-market in Europe, non-EU fund managers must now engage an authorized EU entity such as:

• An EU AIFM

• An EU investment firm

• An EU MiFID-tied agent

• An EU credit institution

• A UCITS management company

This partnership is essential not only for legal compliance, but also to manage pre-marketing notifications and timelines.

A common misconception is that all investor outreach falls under pre-marketing; It doesn’t.

You can still build your brand by sharing firm history, team bios, prior fund performance without triggering compliance obligations.

Pre-marketing only begins when you reference specific fund details, such as strategy, structure, or asset class focus. Crossing that threshold also means crossing regulatory boundaries.

Compliance is no longer optional, but it can become your strategic edge

Operational excellence is now the minimum standard in a competitive fundraising landscape. Regulatory sophistication, particularly in pre-marketing, is now a core differentiator.

LPs want more than strong returns. They want transparency, process discipline, and institutional-grade infrastructure. Mastering pre-marketing regulations not only ensures legal safety, but it also strengthens your investor story.

Treat compliance as an early-stage strategy, not a final-stage fix. The next time you step into an LP meeting, let your pre-marketing discipline speak as loudly as your performance track record.

Worried your pre-marketing or marketing might cross regulatory lines? Let our expert compliance team at ACE Alternatives guide you through it.

Contact Us for more information.

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We’re always looking to amplify great thought leadership. If you’ve got it, send it to patricia@eu.vc.