May 25, 2022

Investors have long been investing in other investors in pursuit of ambitious, booming smaller funds (and making hot deals before their neighbors notice). Andreessen Horowitz has been doing this for years, most recently investing in the art fund NFT, and along with Lightspeed and Sequoia, there are well-known scouting programs that provide seed money to budding investors.

While fund of funds is not a new strategy, it is gaining significant momentum in a weak late-stage market, and there is a flurry of support from top seeding companies. The recent efforts of Tiger Global Management and Seven Seven Six – the venture capital firm of Alexis Ohanian and Caitlin Holloway – are focusing on new fund managers.

For starters, The Information reported this week that hedge fund Tiger Global Management is investing $1 billion in an early-stage technology fund. The story goes that the fund has already backed the likes of Better Tomorrow Ventures, which raised $225 million, Moxy Ventures, which raised $85 million for Fund II, and Chapter One Ventures, which recently raised $25 million. million fundraiser. ,

A few days later, 776 announced the creation of the Titans Fund, an investment vehicle and accelerator that hopes to help aspiring fund managers start their own independent investment firms. In addition to activation capital, the fund seeks to advise interested investors on how to actually complete their thesis. Investors will also have access to the Cerebro 776 software tool, which links portfolio companies to a searchable database of over 40,000 contacts.

The common thread between Tiger Global and 776 is that both investment firms want information at an early stage, and instead of doing it themselves, they can reduce the risk for experiential investors and even conduct those early investigations. Indeed, a few months ago, Bain Capital announced a $1.3 billion fund to support young companies and start-ups by helping the company support various founders and providing new seed opportunities to its existing limited partners.

Fund of Funds Growth responds to another growing trend: the growing interest in systematizing the investment world. In the past, there was an informal, handshake-like environment for co-investment and transmission of deal flows. Now, in a world where scouts can simply set up a rolling fund and budding managers can rely on the community to win deals, companies need to invest where they have partnerships.

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