Fund of Funds

A fund-of-funds is a pool of capital that is aggregated to invest into many other venture funds. A fund-of-funds allows LPs to gain greater exposure to venture capital investments without having to individually meet the minimum commitment for every fund they want to participate in.

While fund-of-funds have increased in popularity, they are still avoided by some LPs because they incur an additional layer of fees (carried interest and management fees) that could be avoided if you were to invest into a typical venture fund.