Fund Structure
Fund of Funds
An investment vehicle that invests in a portfolio of VC funds rather than directly in companies, providing LP exposure to the VC asset class with diversification.
A fund of funds (FoF) is an investment fund that allocates capital to a portfolio of underlying VC funds rather than investing directly in startups. FoFs provide institutional investors (endowments, pension funds, family offices) with diversified exposure to venture capital without the due diligence overhead of evaluating hundreds of direct investments. The tradeoff: an additional layer of fees. LPs in FoFs pay fees to both the FoF manager and the underlying VC funds. Notable FoFs include HarbourVest, Adams Street, and Greenspring (now part of StepStone). FoFs are significant in the VC ecosystem — they're often the capital behind smaller or emerging VC managers and provide crucial capital to the asset class.