Introduction

In today’s dynamic and increasingly sophisticated investment environment, stellar performance is necessary—but no longer sufficient. Alpha generation may get you in the room, but it won’t keep you there. Long-term institutional success demands more: resilient operations, strategic clarity, and credible infrastructure.

At Paravene Capital, our engagements across institutional allocators in Europe, the UK, and Asia have revealed a consistent truth: firms that surpass the critical $100 million AUM threshold share a common trait, investment in robust, scalable internal infrastructure. We call this the “hidden architecture” of asset management.

What We Mean by “Architecture”

Architecture refers to the integrated systems, frameworks, and operational disciplines that underpin a manager’s ability to grow, scale, and endure. These elements are not always visible to the outside world but they’re what institutional allocators increasingly look for during the due diligence process.

The core components of scalable architecture include:

• Operational Integrity

A dependable and transparent operating model, covering: compliance, risk, reporting and service provider governance, is now table stakes for serious allocators.

• Strategic Clarity

A clearly articulated vision for the firm, product development, investor segmentation, and capacity planning, aligned with a consistent investment philosophy.

• Distribution Infrastructure

Access to key allocator networks and CRM systems that enable sustained relationship development across institutions, family offices, and wealth managers.

• Credible Investor Communication

Consistency in messaging across presentations, DDQs, and reports that reflect a deep understanding of allocator priorities and decision frameworks.

• Team Leverage

Scaling beyond founder-led models through empowered teams and institutional delegation, ensuring continuity without compromising investment DNA.

Why Infrastructure Matters Now More Than Ever

Emerging managers today are navigating a pivotal moment: large enough to attract attention, yet often constrained by infrastructure gaps that impede growth.

Challenges extend far beyond performance:

• Rising global compliance demands.
• Complex allocator onboarding cycles.
• Operational stress from increasing AUM.

These are not investment problems—they are architecture problems.

Our experience confirms that institutional-grade infrastructure is the difference between managers who stall and those who scale.

The Market Has Shifted: Operational Resilience as a Competitive Edge

Q1 2025 data highlights a clear inflection point. Amid geopolitical uncertainty, macro volatility, and evolving allocator priorities, the focus is broadening. Today’s investors are not just assessing performance; they’re scrutinizing business resilience.

Our research indicates that managers who cross the $100 million threshold didn’t wait to build infrastructure. They invested early. They built for scale before scale arrived.

Allocators now demand:

• Proactive compliance systems.
• Transparent and auditable reporting frameworks.
• Readiness for cross-border regulatory scrutiny.

Operational due diligence has become as rigorous and consequential as investment due diligence.

The New Institutional Allocator Mindset

Institutional allocators are applying a new lens: one that evaluates not just what managers invest in, but “how” they operate.

Modern portfolios span geographies, asset classes, and structures. Supporting this complexity requires:

• Real-time data infrastructure.
• Audit-proof regulatory compliance.
• Advanced portfolio analytics integrated with risk systems.

Regulatory expectations are also intensifying. Across the UK and EU, managers must now navigate:

• Continued consultation and output from the European Securities and Markets Authority and the Financial Conduct Authority’s 5-year strategy focusing on market integrity and fighting financial crime.
• Sustainable Finance Regimes – SFDR, SDR, TCFD, UNPRI, Net Zero, and the UK Stewardship Code.

Infrastructure must ensure data is consistent, accurate, and defensible. Without it, capital is left on the table.

What Comes Next: The Architecture of Tomorrow

The operational frontier is advancing. Competitive firms are already preparing for:

• AI-enhanced risk and portfolio analytics.
• Cybersecurity as a governance priority.
• ESG data pipelines built for scale and scrutiny.
• Multijurisdictional compliance alignment.

Winning managers will be those who view operational readiness not as a compliance burden—but as a strategic enabler of growth, trust, and institutional capital formation.

Conclusion

At Paravene Capital, we believe the firms that thrive over the next decade will do so by pairing investment skill with invisible excellence— “the hidden architecture”.

Whether you are preparing for your next growth phase or looking to professionalise key functions, engaging external advisors with deep experience across both investment, distribution and operational domains can provide a meaningful edge. At Paravene Capital we work alongside emerging managers to design and implement these frameworks—offering insight, support, and capital as you evolve.

For emerging managers, the message is clear:

“Performance gets you noticed. Architecture gets you funded”.

Infrastructure is no longer a back-office concern. It is your front-line differentiator.

This paper has been prepared by Paravene Capital Investment Management BVI Ltd and Paravene Capital UK Ltd (“Paravene Capital”) solely for the purpose of providing background information to the person to whom it has been delivered. The information contained herein is strictly confidential and is only for the use of the person to whom it is sent and/or who attends any associated paper. The information contained herein is intended for professional investors only and may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Paravene Capital.

No reliance may be placed for any purpose on the information and opinions contained in this paper or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this paper by any of Paravene Capital, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance. Opinions expressed herein may not be shared by all employees of Paravene and are subject to change without notice.

This paper has been prepared by Paravene Capital Investment Management Ltd. Paravene an approved investment manager, regulated by the Financial Services Commission, British Virgin Islands. Paravene Capital (UK) Ltd (FRN 834081) is an Appointed Representative of Sentinel Regulatory Services Ltd (FRN 1007903) which is authorised and regulated by the Financial Conduct Authority.