This Week in Startups
Fund of funds: origins, evolution and deep dive with Michael Kim | E1890
Jan 31, 2024
Michael Kim, a fund of funds expert, shares insights on the evolution and dynamics of early-stage investing. He discusses the concepts of alpha, beta, and quality indices, and dives into why micro VCs are gaining traction. Kim reveals the increasing interest of limited partners in pre-seed and seed investments, highlighting the factors driving funding in these areas. He also emphasizes the importance of consistent returns and the critical relationships between fund managers and startup founders in navigating today's startup ecosystem.
01:02:21
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Quick takeaways
- The shift from casual 'tourist founders' to committed entrepreneurs reflects a more sustainable and promising startup ecosystem.
- Fund of funds play a vital role by filtering and diversifying capital allocation, allowing LPs to access high-potential early-stage investments.
Deep dives
The Shift from Tourist to Committed Founders
In recent years, there has been a noticeable shift from 'tourist founders'—those who enter the startup space without a true commitment—to more serious entrepreneurs who genuinely understand the demands of starting a company. This was especially evident during the peak of 2021 when many, inspired by friends' successes, jumped into the startup scene without fully grasping the challenges. As the market has corrected, many of these casual entrants have exited, leading to a more normalized environment where dedicated founders are increasingly ready to seize growth opportunities. This transition marks a return to a more sustainable entrepreneurial landscape with authentic commitment from those launching new ventures.
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