What is a pledge fund?
A private equity investment where members provide investment on a deal-by-deal basis, with a certain investment goal. This allows them to be selective with the projects they invest in, which isn't necessarily the case with more traditional private equity funds.
Where have you heard about pledge funds?
The concept became popular after the bursting of the dotcom bubble in the early 2000s. Rather than having to invest in potentially high-risk start-ups, pledge funds allow their members to pick and choose the projects they fund.
What you need to know about pledge funds.
Often used as part of venture capital strategies, pledge funds give individuals the chance to pool their resources with other investors, in order to take advantage of opportunities that might not otherwise be open to them.
While investors using traditional private equity funds may have to give up control of their money to a hands-on fund manager, pledge funds allow them to retain more independence. They can avoid certain projects if they're concerned about the potential risks involved, or if they have ethical objections.
Find out more about pledge funds.
For more on how these vehicles differ to other types of fund, see our definition of private equity fund.