Christian Osgood explains how funds of funds work: they raise capital first, then invest it in other funds. He avoids this structure because it asks investors to commit money to deals that don't exist yet, which he sees as too risky.
Chapters
So what about fund of funds to do that magic trick? Fund of funds. I have a lot of thoughts about fund of funds. So it's basically you are pre-raising your capital. You have a fund that then funds your other deals, hence the fund of funds. So you would raise, as an example, I would have a fund that manages capital with its own specific rules and regulations. You would invest in this fund that invests in other funds. I do not use it because a fund of funds means that I am raising capital without a product yet to sell. Look at what I've done in my average returns. You're investing in me for future deals that I find that look just like this.