Mutual Funds (MF) are companies, pooling investments from a large group of investors and put raised capital into short term debt lending, bonds, and stocks. Investors can buy shares of the fund to generate returns and also represent their ownership in the mutual funds. Investments in mutual funds are made mainly for two major reasons; risk diversification and liquidity. The shares of mutual funds are generally instantly redeemable, and investors expect their payments within a week, but in VC deployment of these funds could cause potential illiquidity problems, since startups’ shares do not trade on a liquid market. Mutual funds investing returns are significantly higher than any other forms of investments in venture capital industry and the public markets.
