Fundraising: Traditional vs Pledge Fund
Capital Sports Ventures’ investment arm maintains a model very similar to a typical private equity firm. They look to invest in sports-related startup and high-growth companies in the United States. The CSV team then uses their combined expertise to help accelerate growth of the companies they invest in. CSV is looking to figure out how they should finance their newest fund. One of their options is to raise money the traditional way, which includes finding and collecting money from limited partners. Alternatively, CSV can collect pledges from prospective limited partners. Although the latter option is quicker and easier in the short term, there are many implications and risks associated with raising a fund based on pledges.