Zest Your Equity | 26-June-2024

Fund-of-funds: What are they and how do they work?

Author

Ghalia from Zest
June 26, 2024

This week’s agenda 📜

  • What’s new 🕐

  • Startup fundraising 💰

  • What we’re reading 📖

  • Our blog ✍️

Let’s dive in 👇

What’s New? 🕐

Fund-of-funds: What are they and how do they work?

Fund-of-funds (FOFs) are investment entities that raise capital from Limited Partners (LPs) to invest in a wide variety of other investment funds.

This is different than a typical venture capital or private equity fund—one that invests in a portfolio of individual companies at the discretion of the fund manager.

With a FOF, the manager uses their expertise to select top-performing fund managers across a variety of investment strategies, geographies, and sectors.

With this structure, LPs benefit from the diversification of backing multiple fund managers within a single entity. However, investors should be cautious of an FOF’s fee structure, since typically LPs pay two levels of fees—both to the underlying fund manager as well as the FOF manager.

Startup Fundraising 💰

  • 🇪🇬Egypt-based fintech Connect Money has closed its Seed funding round of $8 million led by Disruptech Ventures and Algebra Ventures.

  • 🇦🇪UAE-based fintech Comfi has secured a $5 million debt facility from an undisclosed Abu Dhabi-based private family office. 

  • 🇦🇪UAE-based hospitality platform Qstay has raised $4.6 million in a pre-Series A funding round, through a combination of conventional and convertible debt.

  • 🇦🇪UAE-based fintech NOW Money has closed a $4 million equity round.

  • 🇯🇴Jordan’s Innovative Startups and SMEs Fund (ISSF) has invested $2 million in VentureSouq Fund II, managed by the UAE-based VC fund manager VentureSouq.

What We’re Reading 📖

What StepStone's $3.3B venture secondaries fund tells us about LPs' current appetite for venture

Limited partners still have a strong appetite for the venture asset class but are seeking out strategies that involve less risk.

HSBC to back fintech in Egypt with $31 million fund

HSBC Egypt is planning to launch a fund worth EGP 1.5 billion ($31.5 million) to back the fintech sector in the North African...

Polynome Group launches $100 million fund to invest in AI startups

UAE-based event management company Polynome Group has announced a $100 million fund to invest in AI startups.

​​What Vinod Khosla says he's 'worried about the most'

Vinod Khosla, the Sun Microsystems co-founder turned prominent investor, talks about how AI is changing tech and the risks of government regulation. If some antitrust enforcement is good, but too much is dangerous, the question is where to draw the line.

Seed investors hitched their wagon to blue-chip VC firms. Now they're hightailing it.

Venture has a reputation as investing's swashbuckling, rebellious and risk-taking youngest child. But as blue-chip as assets under management have ballooned, venture firms have become more institutional and bureaucratic.

The Road To Successful Exits In Saudi Arabia: Lessons From Impact46's Investment Strategy

As a leading VC firm in Saudi Arabia, Impact46 has proudly backed startups on their path to the stock market, which is a milestone that presents itself as a celebration of the company's growth and legitimization of its sustainability.

Market Map: Mega-deals dominate AI's horizontal platform startups

Mega-deals are fueling the horizontal platforms segment of AI and machine learning.

Nvidia teams up with Qatari telecom giant to implement its AI tech in the region

This collaboration will help Qatar offer its clients in Qatar, Algeria, Tunisia, Oman, Kuwait, and the Maldives direct access to Nvidia’s AI and graphics processing technology.

Our Blog ✍️

Have you ever wondered what makes a private market investor say “yes” to a company?

It’s widely known that investors have different expectations for a Series A startup than they do for a growth-stage, or late-stage company. But what are these criteria that investors look for?

In our latest blog, we dissect what types of firms invest at the different stages of a private company’s journey, what criteria investors look for, and how the broader market can impact startup fundraising.

You can read our latest blog here!

Want to learn more? Schedule a time with our team below!

How did we do?

Login or Subscribe to participate in polls.