Pledge Fund

AAA

DEFINITION of 'Pledge Fund'

A special type of fund in which members of the fund work toward a specific investment goal by making defined contributions in a pool over a period of time. Many angel investors have started to employ a pledge fund format in venture capital investing.

INVESTOPEDIA EXPLAINS 'Pledge Fund'

After the dotcom bubble, venture capitalists became more concerned about the start-up companies that they would finance. Many venture capitalists decided to set up pledge-fund style angel investor clubs instead of following the conventional format that was popularized in the 1990s. This was largely because using a pledge fund format would not force individual angel investors to invest in ventures that the majority of the group decided on, but would allow each member to elect whether to take part in an investment opportunity on a case-by-case basis. This method was well received by investors who were skittish about start-up investments after the dotcom bubble had burst.

RELATED TERMS
  1. Angel Investor

    An investor who provides financial backing for small startups ...
  2. Venture Capital Funds

    An investment fund that manages money from investors seeking ...
  3. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  4. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  5. Bubble

    1. An economic cycle characterized by rapid expansion followed ...
  6. Dotcom

    A company that embraces the internet as the key component in ...
Related Articles
  1. Active Trading

    The Benefits Of An Investment Club

    Don't want to be a passive investor? Discover how investment clubs allow you to take control of your portfolio.
  2. Personal Finance

    4 Tips For Joining An Investment Club

    These circles of like-minded people are a wonderful way to explore investing without laying out large sums.
  3. Entrepreneurship

    The Best (And Worst) Countries To Be An Entrepeneur

    Where you start a business can influence its success. This new World Bank study will help you find the most – and least – favorable economic climates.
  4. Investing News

    Looking to Open a Franchise? These Topped The List In 2014

    These franchise businesses stood out in 2014.
  5. Not every new company or product makes it, but many successful startups share the following characteristics.
    Entrepreneurship

    6 Characteristics Of Successful Apps

    Not every new company or product makes it, but many successful startups share the following characteristics.
  6. When it comes to managing finances and tracking the markets on the go, there are a number of excellent apps that can be downloaded and installed onto your mobile device.
    Entrepreneurship

    Top Stock Market Apps For News Or Trading Or Both!

    When it comes to managing finances and tracking the markets on the go, there are a number of excellent apps that can be downloaded and installed onto your mobile device.
  7. A brief overview of the top apps that help forex traders with on time information, charts and more.
    Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.
  8. As technology has evolved, the landscape of the music industry has changed from radio broadcasts to mp3 and now streaming services.
    Entrepreneurship

    Will Pandora And Spotify Disrupt Music Royalties?

    As technology has evolved, the landscape of the music industry has changed from radio broadcasts to mp3 and now streaming services.
  9. Mutual Funds & ETFs

    What is the difference between a hedge fund and a private equity fund?

    Learn the primary differences between hedge funds and private equity funds, both of which are utilized by high net worth investors.
  10. As the number of new employees increases, the marginal product of an additional employee will at some point be less.
    Investing

    More is Less: Diminishing Marginal Returns

    In formal economic terms, the law of diminishing marginal returns states that as the number of new employees increases, the marginal product of an additional employee will at some point be less ...

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center