Sarah Anderson is the Fund Manager of the Cintrifuse Syndicate Fund.
What is a strategic Fund of Funds?
A Fund of Funds, simply put, is a fund that invests in other funds, as opposed to a fund that makes direct investments into startups.
What makes it strategic?
The Cintrifuse Syndicate Fund focuses on venture capital funds in technology and life sciences. The strategic focus of the Fund is to invest in early stage venture funds that provide a high level of exposure to innovation for our Limited Partners (LPs) or investors, primarily large corporations, whom we refer to as BigCos. Through our proprietary process, we are able to map our portfolio of technology investments to meet BigCo innovation needs and provide them early access to some of the best emerging technologies in the world.
There are three key benefits for our investors of our strategic Fund of Funds:
- Access to innovation
- Leverage for internal resources
- Financial performance
Access to innovation
A dedicated gateway to innovation is the most critical component of our strategy.
The Cintrifuse Syndicate Fund’s structure lends itself to a diversified portfolio of funds and underlying technologies. Many BigCos have strategic interests in a particular category such as advanced manufacturing, fintech/payments, or ecommerce. By investing in funds that specialize in these areas, the Cintrifuse Syndicate Fund is able to increase deal flow for these BigCos in specialized fields and expand industry exposure to adjacent sectors.
The result is better depth and breadth of exposure within designated technology sectors, such as cloud, data analytics, cybersecurity, supply chain and mobile. This exposure can improve quality and speed of innovation among our investors.
Importantly, our relationships with fund managers and industry experts reach beyond the funds in our portfolio. Our network is broad – with access to funds across the world, and thousands of startup technologies. We’ve developed relationships with over 500 funds in the US, Israel, and Europe, and we reach into this broader network during our search for the right innovation for our investors.
Leverage for internal resources
It’s been our experience that BigCo resources are increasingly restrained – both capital and talent. Innovation, while important for the company, tends to be one of the most vulnerable investments when markets get rocky, even though it is essential for long-term growth.
How the Syndicate Fund leverages internal corporate resources:
- Leverage for capital. Instead of creating a dedicated internal direct fund or pooling internal capital to make internal strategic investments, a smaller investment size into a Fund of Funds vehicle can leverage internal capital by joining other corporate partners. For example, a single $5M internal capital investment combined with other corporate capital may pool to $100M or more and create a substantial vehicle in which to provide the needed access to innovation.
- Augment existing corporate talent. Our corporate connections team is made of dedicated professionals who work with corporations in different industries to help streamline the process around innovation through engagement with startups. This includes fund management, corporate innovation experts, and assistance in screening and piloting.
- Learn best practices. Perhaps the greatest value provided by the Fund of Funds has been our ability to build connections between corporations with common innovation interests. Learning from the challenges and opportunities of like-minded executives and experts has been helpful in allowing our investors to quickly learn and adopt new processes. We also leverage corporate innovation leaders such as Jeremiah Owyang, CEO of Crowd Companies, who encourages corporations to launch innovation programs and lead experiments, and Anand Sanwal, CEO and co-founder of CBInsights, who discusses corporate innovation theatre and why it doesn’t work.
The strategic nature of the Cintrifuse Syndicate Fund creates a strong positive feedback cycle which improves performance outcomes in two ways:
- Many of the top venture funds in the country are oversubscribed and don’t have the capacity to allow new investors to participate. However, because our investors are global corporations whose strategies are highly dependent on technology innovation, these venture funds benefit greatly from the relationship with Cintrifuse. This is primarily due to the potential to create new corporate customer relationships for many of their portfolio companies. The ability of Cintrifuse to work with these funds – funds who have strong track records and access to some of the best technologies – expands our ability to provide financial and innovation returns to our investors.
- As our investors partner and pilot with startups from the portfolio, those startups are vetted by enterprise-level customers. With these new contracts, their revenues increase, and their valuations correspondingly rise. This results in increases in the overall value of the portfolio, further bolstering returns to our investors, who hold equity in those startups.
The strategic Fund of Funds structure works for corporations of all shapes and sizes, regardless of their internal innovation strategies.
We can augment existing innovation processes as well as stimulate new innovation on an internal platform. Our corporate connections team helps to reinforce internal innovation talent and resources, getting the necessary departments and divisions involved in the process.
We currently work with over 20 corporations from insurance, healthcare, CPG, and a host of other sectors.
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To uncover more information about our Syndicate Fund, explore this website.
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