Investors have become increasingly critical when evaluating whether to invest with sponsors across the private funds industry. One way private equity (PE) sponsors have overcome this issue is by ceding control over certain elements to investors in exchange for other benefits. The pledge fund structure suits these shifting dynamics because it enables PE sponsors with limited track records to attract investors with the promise of a soft commitment, allowing investors to join investment opportunities at their discretion. Sponsors also gain, however, from the higher carried interest payments they receive by not netting losing investments against winners. This three-part series evaluates the various factors sponsors should weigh when considering whether to adopt the pledge fund structure. This first article details various benefits the structure confers to sponsors, including several positive ways that the fee structure for pledge funds deviates from that of the traditional, blind-pool PE structure. The second article will provide an overview of critical terms and mechanics sponsors must address in the investment management agreement when forming a pledge fund. The third article will describe the fundraising process and various structural approaches a sponsor can take for making investments. For more on fee structures, see “The Death of Alpha: A True Challenge or a Poor Manager’s Excuse? DMS Summit Discusses Alpha Generation, ‘2 and 20’ Fees, AI and Impact Investing” (Apr. 12, 2018); and “How Are Your Peers Responding to Investor Demand for Alternative Fee Structures?” (Oct. 12, 2017).