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How I Invest with David Weisburd
E70: How VC Fund of Funds Work with Alex Edelson
Jun 6, 2024
Alex Edelson, founder of Slipstream Investors, discusses the benefits of investing in VC fund of funds with David Weisburd. They cover topics like portfolio construction, due diligence process, ideal number of funds for diversification, assessing fund managers, importance of founder references, gaining access to oversubscribed funds, and value of transparency with GPs.
19:30
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Quick takeaways
- Investing in a fund of funds offers exposure to top venture firms efficiently, beneficial for diversified investments.
- Portfolio diversification in venture capital involves allocating around 90% to core investments across different vintage years for risk mitigation.
Deep dives
Investing in Single Fund versus Fund of Funds
When deciding between investing in a single fund or a fund of funds, the trade-off lies in the level of concentration versus diversification. Investing in a single fund allows for greater concentration if you can identify a great fund. However, investing in a fund of funds provides exposure to top-tier venture firms when time constraints or access issues hinder direct fund selection. Fund of funds offer a way to access top-performing venture funds efficiently and can be a strategic choice for investors seeking broader exposure.
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