This Week in Startups

Fund of funds: origins, evolution and deep dive with Michael Kim | E1890

19 snips
Jan 31, 2024
Michael Kim, a fund of funds manager at Cendana Capital, specializes in seed and pre-seed investments. He discusses the pivotal role of fund of funds in venture capital, detailing their strengths and how they support smaller funds. Michael dives into the appeal of early-stage investments for limited partners, the rise of micro VCs, and the significance of examining alpha and beta in investment strategies. He also shares insights on current market trends and the future outlook for startups, highlighting the shifting dynamics in the funding landscape.
Ask episode
AI Snips
Chapters
Transcript
Episode notes
INSIGHT

Fund-of-Funds Purpose

  • Fund-of-funds exist because some LPs are too large to invest in small funds or lack the staff to evaluate numerous seed funds.
  • Fund-of-funds act as filters, providing access and diversification while outsourcing the diligence process.
ANECDOTE

Forerunner Example

  • Michael Kim invested heavily in Forerunner's early funds but didn't continue as it grew larger and shifted focus.
  • He introduced Forerunner to UTIMCO, showcasing how fund-of-funds can act as scouts for larger LPs.
INSIGHT

Rise of Micro VCs

  • Micro VCs emerged because cheaper startup costs and larger multi-stage firms created a gap in early-stage funding.
  • This gap allowed for smaller funds to specialize in providing seed-stage investments.
Get the Snipd Podcast app to discover more snips from this episode
Get the app