Disadvantages of Investing in a Fund of Funds

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

While a fund of funds investment approach may have benefits, there are disadvantages.

Here is a list:

The returns on a fund of funds range widely.

It's rare that a fund of funds makes more than 25% IRR.

It's just difficult to do with the funds spread across so many investment theses.

Fund of funds are expensive.

Consider the management fees and carried interest before committing to one.

Too much access.

Some fund of funds offer access to anything and everything.

With so much choice, it can be difficult to build a winning fund of funds.

Exits often come through the secondary market.

These give very poor returns.

Before investing in a fund of funds, check for references with other investors who have been in the fund.

Talk with those who have been in it for a substantial period of time, say three years or longer.

This should provide guidance on how well they work.

A fund of funds has benefits and disadvantages.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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On this episode of Investor Connect, Hall welcomes Lu Zhang, founder and managing partner of Fusion Fund. Calling in from downtown Palo Alto, Lu shares how Fusion Fund, based in the heart of Silicon Valley, backs early-stage companies with difficult-to-copy technology across enterprise AI, healthcare AI, industry automation, edge computing, networking, and data privacy, with an emphasis on heavy engineering, research, and execution.

She explains how the firm evaluates deals by starting with market size and timing, then validating defensible technology through in-house technical diligence, and she outlines what makes durable AI in a crowded market, including unique high-quality data access, efficient architecture for cost and deployment constraints, domain expertise to reduce hallucinations, and strong enterprise go-to-market execution.

Lu also describes Fusion Fund's hands-on support through corporate CXO networks, fundraising and board-structure guidance, talent and expert networks, and M&A/IPO preparation, while discussing diversity's role in innovation, global talent pipelines, their internal AI analyst "Ada," healthcare AI as a major opportunity, and advice for first-time founders on investor fit, timing, dilution, and milestones.

Visit Fusion Fund at www.fusionfund.com/

Reach out to at www.linkedin.com/in/luzhangvc/ , and on x.com/luzhangvc?lang=en

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https:/_/tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

How To Approach a Founder Seeking Funding

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Investors looking to fund startup investments often receive unsolicited calls from founders.

In most cases, the founder is not yet fundable but is making a go of it.

To find quality investments, investors need to be proactive in their outreach to founders.

Here are some key steps in approaching a founder about funding.

An introduction will be helpful, especially if the founder has a great deal of interest from the investment community.

A warm introduction will open the door for a call or meeting.

Many founders are open to discuss with investors, so a cold email or call will suffice.

In taking the call, the investor should ask, "What help do you need?"

A startup has many needs, and a founder is always looking for help.

The investor can use this as a way of building rapport with the founder.

It's also a good way to learn more about the startup and where they are on the growth path.

By providing mentorship and networking, the investor can test out how well the founder takes feedback and, most importantly, how well they execute on it.

Consider offering help to a founder in your investing outreach to learn more.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.