What are feeder funds?

In this blog, we explain what feeder funds are and why they can be a valuable addition to your investment strategy.

What exactly are feeder funds?

A feeder fund is an investment vehicle that pools capital from multiple investors to invest in a single private equity or venture capital fund. Unlike a fund-of-funds—where you invest in a diversified basket of funds—a feeder fund allows you to invest directly into one specific target fund.

You may already know Marktlink Capital from our fund-of-funds, where you, as an investor, gain access to a broad portfolio of private equity or venture capital funds. A feeder fund, however, focuses on a single underlying fund. We offer these feeder funds for leading names like Parcom, Egeria, Forbion, and secondaries funds from ICG and CVC. Through Marktlink Capital, you gain (exclusive) access to top-tier funds with a strong track record.

How do feeder funds work?

Feeder funds serve as a conduit between you, the private investor, and the underlying private equity or venture capital fund. Your investment is pooled with those of other investors and then collectively invested into the target fund. This structure gives you access to high-performing funds that are typically reserved for large institutional investors.

Benefits of feeder funds

There are several compelling reasons to consider feeder funds alongside your fund-of-funds investments:

Exclusive access to top-tier funds
Feeder funds offer direct exposure to the winning strategies of leading funds. Normally, such access is difficult due to high minimum investment requirements—often in the millions. Through our feeder funds, we bundle commitments from individual investors like you, making this type of access possible. Just like with our fund-of-funds, our mission is to open the door to top-performing funds for private investors.

Targeted portfolio positioning
Feeder funds allow you to place specific accents in your portfolio. By choosing funds with a clear sector focus or strategy, you can align your investments with your broader financial goals. Think of themes such as AI, healthcare, or sustainability.

Attractive cash flow profile
Not all funds have the same cash flow profile. The pace at which capital is called and returned can vary. Many investors choose a secondaries feeder to optimise their cash flow profile. Since secondaries funds invest in mature fund portfolios or companies, they tend to have shorter fund lifecycles, meaning capital is typically deployed and returned faster than in traditional PE funds.

Feeder funds vs fund-of-funds: what's the difference?

The key difference between feeder funds and fund-of-funds lies in diversification:

• Feeder funds: You invest in a single specific fund, which may carry more risk but also greater potential returns if the fund performs well.

• Fund-of-funds: You invest in a basket of 10–20 different funds, providing broader diversification and a more moderate risk-return profile.

Both options complement each other well in a balanced investment portfolio.

Investing in feeder funds with Marktlink Capital

At Marktlink Capital, we only select feeder funds from well-established names with a proven track record. We do not invest in first-time funds, but instead focus on those that have delivered strong results consistently—even during periods of economic downturn. Additionally, we always select our funds with the Dutch investor’s tax situation in mind, ensuring optimal fiscal efficiency.