E70: How VC Fund of Funds Work with Alex Edelson
10X Capital Podcast
The 10X Capital Podcast is a podcast focused on interviews with the world’s top Venture Capitalists and their Limited Partners.
David WeisburdErik Torenberg

E70: How VC Fund of Funds Work with Alex Edelson

E70 • Jun 6, 2024 • 20 mins

Alex Edelson, Founder of Slipstream Investors, sits down with David Weisburd to discuss the benefits and tradeoffs of investing in venture capital fund of funds. They also touch on Slipstream’s investment thesis, portfolio construction, and due diligence process.

Key Points

  • Investing in a single fund offers the potential for higher returns but also carries more risk, whereas a fund of funds provides exposure to top quartile and decile venture firms with the benefit of diversification and a potentially higher floor for returns.
  • Slipstream's investment strategy focuses on emerging managers in their first few funds, with a portfolio construction of 90% core investments and the flexibility to co-invest in breakout companies, maintaining a balance between US-based and international funds.
  • The due diligence process for fund managers includes evaluating their motivation, portfolio construction, competitive advantage, and receiving feedback from founders and downstream VCs, with a preference for off-list references to respect the GPs and their relationships.
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