Rounds & financing
Also called FoF, multi-manager fund
A fund of funds invests in other venture funds rather than directly in companies, giving its own investors exposure to a spread of managers in exchange for a second layer of fees.
The fund of funds raises capital from institutions, family offices and individuals, then commits it across a portfolio of underlying venture funds as a limited partner. Those funds invest in companies in the usual way.
The appeal is access and diversification. Established venture funds are frequently closed to new LPs, and a single fund of funds commitment can provide exposure across managers, vintages and geographies that would take years to assemble directly.
Fees stack. The underlying funds charge management fees and carried interest, and the fund of funds charges its own on top, often around 1% and 5% to 10% carry. That second layer has to be earned through manager selection and access.
For founders, the relevance is indirect but real: several well-known seed funds are substantially backed by funds of funds, so their fundraising cycles influence how much capital reaches the seed market.
Access and diversification. Top funds are often closed to new LPs, and minimum commitments to individual funds can exceed what a smaller investor can allocate to a single manager.
Typically around 1% management and 5% to 10% carry at the fund-of-funds level, layered on top of the 2% and 20% charged by each underlying fund.
Mostly not. Some run a small co-investment sleeve alongside their fund commitments, but the core strategy is investing in managers rather than companies.
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