This
is a special type of fund made up of a group of investors that are loosely
committed to an investment team. The
manager of the pledge fund makes investments based on a predetermined set of
parameters. The investors in the pledge
fund must approve each transaction and determine if they want to pursue the
investment independently or as part of the fund. This system does not force
investors to go with the majority and allows them to decide on a case by case
basis if they want to invest with the group or individually.
Additional meaning of Pledge Fund:
Pledge funds became popular after dotcom craze of the
1990s. Some Angel investors have now started using a pledge fund format for some of their venture capital investments.