Blind pool, empty pool
Investment funds launch all the time with much fanfare and almost no money behind them. A few pull it off, the rest simply run out of road. I’ve never met Sabrina Carpenter, and I doubt very much that she is even aware of my existence. Declaring, then, that I intend to court and ultimately marry […] Blind pool, empty pool was originally published on Emerging Europe .
Investment funds often launch without any funds behind them, despite much fanfare and grand announcements. These "blind pools" function as promises, rather than actual pools of cash, typically backed by pension schemes, endowments, insurers, and limited partners. A fund manager searches for deals, and once a suitable opportunity arises, they "call" upon the promised capital.
This process often begins with marketing efforts, including launch events and sleek websites, before any actual money is invested. The target size of the fund is merely a target, and many are unrealistic or unmet. In July 2019, Japan's SoftBank announced Vision Fund 2 with a target size of $108 billion, yet few of the promised funds actually delivered, with SoftBank itself contributing the bulk of the capital.
Instances of fraud are rare but notable, such as the case of a hedge-fund manager's personal driver who stole over $1 million from clients. The majority are optimistic fund managers who mistake enthusiasm for actual cash. The market has become adept at recognizing these overly optimistic ventures, with the number of first-time funds closing down significantly in recent years.
However, launching a fund without any actual funds is possible, and independent sponsors or "fundless sponsors" may have a higher success rate by finding deals first and raising cash later.
Written by urgent.news from Emerging Europe's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
