The typical MCA fund structure — GP/LP, master-feeder, and what it means for your advance.

The two MCA funder archetypes

Before getting into structure, it helps to know there are really two kinds of MCA funders. The first is the balance-sheet funder — a privately held operating company that funds advances off its own equity and bank financing. The founders own the company, take all the profit, and bear all the risk. Most small and mid-size MCA shops look like this. Legal structure is usually a Delaware LLC or Delaware C-corp; there's no LP/GP split because there are no outside investors.

The second is the institutional funder — a fund manager that has raised capital from limited partners and deploys that capital across a portfolio of MCA advances. This is where the GP/LP structure, master-feeder vehicles, and the rest of the institutional fund plumbing shows up. Most large MCA shops have at least one such fund attached to the operating company, and some run multiple fund vintages simultaneously.

This guide focuses on the institutional structure. The economics matter to merchants because they explain why these funders behave the way they do — why the credit box changes mid-quarter, why renewals can disappear at a fund's end-of-investment-period date, and why pricing varies across funders that look identical from the outside.

The legal stack

A typical institutional MCA funder runs at least four legal entities side by side. Mid-size and large funders run more. Here's the canonical setup:

1. The management company (ManageCo)

This is the operating business. It employs everyone — underwriters, ISO managers, collections staff, tech, finance, executive team. It earns the management fee and incentive fee from the fund(s) it manages and uses that revenue to cover payroll, office, and operating costs. Usually a Delaware LLC. The principals own it.

2. The general partner entity (GP)

Each fund has its own GP entity — a Delaware LLC that's the sole general partner of that specific fund's limited partnership. The GP is what holds the carried interest (the performance fee) and what bears unlimited liability for fund obligations. The principals usually own the GP either directly or through their ManageCo.

3. The fund (the LP)

This is the actual investment vehicle — a Delaware Limited Partnership (or a Cayman partnership for offshore feeders). The fund is what owns the MCA receivables economically, holds the warehouse line obligations, and collects cash flows. LPs contribute capital to the fund based on their commitments; the GP runs it.

4. The SPV / origination entity

Below the fund, there's almost always a wholly-owned special-purpose vehicle that actually signs MCA contracts with merchants, holds the receivables on its balance sheet, and is the entity named on your contract. The SPV is bankruptcy-remote from the fund — meaning if something goes wrong upstream, the receivables it holds are protected from fund-level creditor claims (and vice versa). Warehouse lines and securitizations are also often issued at the SPV level rather than the fund level.

When you sign a contract that says "[Funder Name] LLC" or similar, you're often signing with this SPV, not with the management company or the fund itself.

The master-feeder structure

Larger institutional MCA funds use a master-feeder structure to accept capital from investors with different tax statuses. The standard setup:

• US Feeder Fund (Delaware LP) — accepts capital from US-taxable investors. Passes through income and losses on K-1 statements.
• Offshore Feeder Fund (Cayman Islands LP or LLC) — accepts capital from foreign investors and US tax-exempt investors (pension funds, endowments, foundations). The Cayman vehicle is treated as a corporation for US tax purposes, which blocks UBTI (unrelated business taxable income) for tax-exempts.
• Master Fund (Cayman LP) — both feeders invest into this. The master fund actually owns the MCA receivables (or owns the SPV that owns them). All investment activity happens here; the feeders just hold their pro-rata equity interest in the master.

This sounds elaborate, but it's the standard for any institutional credit fund with a cross-border investor base. The legal setup costs run $250K-$500K to launch and $100K-$200K per year to maintain. That's a real operating cost that goes into the fund's expense load, which goes into the management fee, which goes into the factor rate.

The capital commitment cycle

A closed-end MCA fund typically follows this rhythm:

• Fundraising (6-18 months). The GP markets the fund to potential LPs, gets soft commitments, then has a series of "closings" where LPs sign subscription documents and become legally committed.
• Investment period (2-3 years). The GP makes capital calls, drawing committed capital from LPs as needed to fund new MCA originations. The fund actively grows.
• Harvest period (2-3 years). Investment period ends, no new MCAs are written (or only renewals for existing relationships). Existing portfolio runs off; cash flows distribute to LPs.
• Wind-down (1-2 years). Remaining receivables collected, workout/recovery on defaults, final distribution to LPs, fund dissolved.

This rhythm matters to merchants in two ways. First, at the end of the investment period, the fund stops writing new deals — which means a funder you had a great relationship with might suddenly stop returning your broker's calls. Second, during harvest period, the fund is laser-focused on collections — renewals get harder to come by because the fund isn't trying to grow.

The way around this is that most funders run multiple funds in succession. Fund I is in harvest mode; Fund II is the active vehicle. When Fund II ends its investment period, Fund III takes over. A merchant working with a funder is implicitly being rolled across fund vintages without ever knowing it.

Evergreen / open-ended structures

A growing minority of MCA funds use an open-ended structure instead of the closed-end vintage cycle. Open-ended funds accept new LP capital and allow redemptions on a quarterly or semi-annual basis. They never wind down — they're continuous.

Pros for the funder: no fundraising cycles, smoother growth, easier for LPs who want flexible exposure.

Cons: redemption pressure can force the fund to liquidate at bad times, harder to deploy committed-capital strategies, valuation of illiquid MCA receivables for redemption purposes is messy.

For merchants, open-ended funds tend to provide more consistent renewal availability because there's no investment-period cliff. But they can also suddenly tighten their credit box if LP redemptions spike during a stressed quarter.

How LPs evaluate MCA funds

The LP side of an MCA fund is mostly institutional — credit-focused hedge funds, family offices, BDC managers, insurance company alts allocations, and sovereign wealth funds with private credit buckets. They evaluate MCA funds on:

• Track record of prior funds — IRR, multiple of invested capital (MOIC), loss-adjusted yield
• Origination capacity — can the fund actually deploy the committed capital, or will it sit in a money-market fund earning 5%?
• Underwriting discipline — historical loss rates by vintage, cohort, paper grade
• Servicing infrastructure — collections recovery rates, default cure rates
• Capital structure — does the GP have warehouse access to lever the fund's equity?
• GP commitment — are the principals putting their own money in, and how much?

A fund with a track record of 15-18% net IRR to LPs over multiple vintages can raise capital quickly and at favorable economics. A fund without a track record might struggle to raise $25M and have to give up better economics to anchor LPs. This affects the funder's blended cost of capital and ultimately the factor rates they can offer merchants.

What this means for you

The structure of an institutional MCA funder is one of the hidden inputs to your experience as a merchant. A funder with a freshly-closed fund in active investment mode is going to be aggressive on pricing and credit box, hungry to deploy capital. A funder with a fund near the end of its investment period is going to be selective, slower to respond, and stingier on renewals.

You can't always see this directly, but you can see the signals: how fast they respond to deals, whether they renew aggressively or grudgingly, whether their credit box loosened or tightened in the last 60 days. The better matching platforms watch these signals and route accordingly. The merchants who do best are the ones who get matched to a funder whose fund timing aligns with their need.