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Fund Economics

What is the most common free structure for a fund of funds?

Asked by: Mohammed Kamal
1
0
Oct 24, 2024
I know the 2 and 20 wouldn't apply here, since you are investing in directly in funds.

If 30% of the portfolio goes into Funds, and 70% is direct into companies (mostly coinvests), are you still considered a Fund of Funds?
1 answer
0
Mike Suprovici
Accepted Answer
Oct 24, 2024
Fund of Funds fees are typically 1 and 10. 

On the strategy you mentioned above, ti sounds like a classic VC Fund. You will not be able to do 70/30 though due to the VC exemption and the complexity with reporting. But it could be 80/20.
To add, 70/30 FOF strategy would make it such that the FOF won't be a qualifying venture capital fund. To the extent you are relying on the VC adviser exemption, you'd then no longer be managing solely VC funds and you'd blow your exemption.
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Jon Tong
Oct 24, 2024 6:20pm
Ok but it sounds that If I go 20% into funds and 80% direct, It qualifies as a VC fund.
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Community Member
Oct 25, 2024 7:33pm
On a high level, yes. But, the devil is in the details...
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Mike Suprovici
Oct 25, 2024 8:03pm
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