Fund of Funds (FoF)

Fund investing in other funds. A working definition from the RGM marketing glossary.

Schematic — Fund of Funds (FoF)

Fund investing in other funds.

Term: Fund of Funds (FoF)
Field: Venture Capital
Category: Capital & Investing

Definition in plain terms

Start here.Fund of Funds (FoF) is a capital concept your team should define once. A loose definition misaligns budgets and reporting.

Fund investing in other funds.

Fund of Funds (FoF) is a capital & investing term for a capital concept. Agree the scope and two people stop talking past each other.

The mechanics

Keep this in mind.Fund of Funds (FoF) works one way for a lean team and another for a large one. The mechanics follow the context.

Think of Fund of Funds (FoF) as context-bound. A small shop reads it simply; an enterprise reads it with more nuance. That is normal -- Fund of Funds (FoF) is shaped by audience and channel mix. Read Fund of Funds (FoF) without care and the plan wobbles; be precise and the read holds.

The working rule is plain. Agree what Fund of Funds (FoF) covers first, then act on it. Skip that order and Fund of Funds (FoF) loses its shared meaning, and two teams end up measuring two different things. Look at it this way.

Where it shows up

Keep this in mind.Fund of Funds (FoF) earns attention at three moments: setting budget, choosing a metric, comparing options. Away from those, it waits.

Use Fund of Funds (FoF) when it changes an outcome. For capital & investing teams, that tends to be three recurring moments. With no choice live, Fund of Funds (FoF) is good to know, not to chase.

Setting budget. Fund of Funds (FoF) clarifies which budget line deserves more.
Choosing a metric. Fund of Funds (FoF) checks that the figure is not just noise.
Comparing options. Fund of Funds (FoF) normalizes a side-by-side that hides real gaps.

Worked example

Hold that thought.To make Fund of Funds (FoF) concrete, the case below uses a Bessemer-tracked SaaS firm and figures from public reporting plus RGM analysis.

Look at a Bessemer-tracked SaaS firm. In a rule-of-40 screen, Fund of Funds (FoF) drove the decision rather than sitting in a footnote. A baseline came first, then a single agreed meaning of Fund of Funds (FoF), then the read: durable growth separated from cash-burn growth.

The numbers behind Fund of Funds (FoF) -- illustrative only, RGM analysis
Stage	The step taken	What it bought
Baseline	Read the starting point before any change to Fund of Funds (FoF).	Something concrete to compare to.
Define	Locked the scope of Fund of Funds (FoF) so it stayed stable.	Two people, one meaning.
Act	A rule-of-40 screen — one variable.	Only one thing moved.
Result	Durable growth separated from cash-burn growth	An outcome you can trust.

These Fund of Funds (FoF) numbers are illustrative -- RGM analysis. The structure travels; the specific figures do not.

Where teams go wrong

Worth a slow read.Teams slip on Fund of Funds (FoF) in four familiar ways. Each makes a soft assumption look like a precise number.

One blanket rule. Applying Fund of Funds (FoF) the same way everywhere. Split it by audience, channel, and business model.
No anchor. Quoting Fund of Funds (FoF) without a starting point. Always pair it with a baseline.
Chasing the word. Optimizing Fund of Funds (FoF) for its own sake. Check it tracks a real outcome.
Bad compares. Benchmarking Fund of Funds (FoF) with no adjustment. Account for the model differences first.

Questions teams ask

How is Fund of Funds (FoF) defined?

Fund investing in other funds. Agree the scope of Fund of Funds (FoF) before the planning starts.

What makes Fund of Funds (FoF) worth knowing?

Fund of Funds (FoF) matters because vague vocabulary breaks strategy. A precise, shared definition keeps a team aligned.

How do teams use Fund of Funds (FoF)?

Fund of Funds (FoF) supports a real choice: where money goes, what gets measured, which option wins. The a Bessemer-tracked SaaS firm case traces it.

What goes wrong with Fund of Funds (FoF) most often?

Treating Fund of Funds (FoF) as one blanket rule and reporting it with no baseline. Both hide a soft assumption.

How is Fund of Funds (FoF) defined?: Fund investing in other funds. Agree the scope of Fund of Funds (FoF) before the planning starts.
What makes Fund of Funds (FoF) worth knowing?: Fund of Funds (FoF) matters because vague vocabulary breaks strategy. A precise, shared definition keeps a team aligned.
How do teams use Fund of Funds (FoF)?: Fund of Funds (FoF) supports a real choice: where money goes, what gets measured, which option wins. The a Bessemer-tracked SaaS firm case traces it.