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Purpose of creating an access fund

Seems like a fundamental concept, so hopefully a quick explanation - What is an 'access' fund and what is the point of creating one? Context: "ABC Ventures Direct III Access will invest in ABC Ventures Direct III". Sounds like a FoF structure where the Access fund is an LP of the latter fund III. Thanks
  • David Teten: I think youโ€™re talking about overlays? see https://teten.com/how-vcs-can-and-should-invest-in-later-rounds/
  • Sam Stein: David, thatโ€™s a great article. Learned something new โ€“ thanks for sharing. But I donโ€™t think itโ€™s an overlay fund because it is not a fund investing in the portfolio companies at later stages of fund III, rather it says fund III access will invest โ€œinโ€ fund III, which makes me think some sort of FoF structure, maybe to give access to a type of investor thatโ€™s not able to invest directly in fund III. Iโ€™m asking around and will let you know when I figure it out
  • Brian Yoon: I think of it almost like a SPV that small to mid-sized VCs would use for growth rounds. but totally could be a FoF โ€“ thing being LPs would not agree to letting that happen
  • Sam Stein: The access fund Iโ€™m looking at is run by a large institutional asset manager. I think they are acting as a placement agent in that they are offering the access fund to their clients, securing a large amount of commitments and then providing that capital to the VC for a small placement fee kickback. I think the VC also uses the services of the asset manager, so it is probably a mutually beneficial situation.

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