Ever wondered about the risk and reward dynamics of VC investing? Alex Edelson, our guest in the 10X Capital Podcast episode, breaks it down for us. One company gives the highest upside but also the lowest downside. But when you invest in a fund, the upside lowers and the downside increases. And with a fund of funds? You get a lower upside but a higher floor.
Edelson argues that while an average venture fund may not generate the returns most LPs dream of, a venture fund of funds has a higher chance of satisfactory returns. It's an intriguing perspective that goes against the common 'all eggs in one basket' strategy.
But as host David Weisburd poses the question - if you had $1,000,000 to invest in venture, why would you choose a single fund over a fund of funds? What's the trade-off? It's an interesting conundrum that's sure to spark some thought among investors.
Tune into E70 of the 10X Capital Podcast to hear more of this fascinating discussion and decide for yourself - is a fund of funds the safest bet in VC investing?
