A traditional venture fund operates on a simple premise: raise a pool of capital, deploy it across a portfolio of startups over a defined period, and generate a return distributed across all investors in the fund. The underlying logic is probabilistic. Back enough companies, and the mathematics of outliers will do the work.
That model has produced real returns. It has also produced real distortions, in how capital gets deployed, in how founders get supported, and in what investors actually own when they commit to a fund.
We chose the deal-by-deal model because it avoids some of those distortions, at costs we set out below.
What the Fund Model Actually Requires
To understand why the alternative matters, it helps to be precise about what the fund model demands of its participants.
An LP committing to a A fund structure in which investors commit capital before knowing which companies it will be invested in.More in glossary fund is making a decision without knowing what they are investing in. They are backing a manager's judgment across a portfolio that does not yet exist, over a timeline that extends a decade or more, with limited ability to influence individual decisions along the way. The exposure is diversified by design. So is the accountability.
For the manager, the fund creates deployment pressure. Capital raised must be put to work within a defined window. That pressure does not always produce better decisions. It produces decisions made on schedule, which is a different thing.
The result is a model where speed is rewarded, selectivity is structurally difficult, and the individual investment matters less than the aggregate bet. For a manager with strong judgment this is a constraint, while for one without it the same structure is cover.
What the Deal-by-Deal Model Changes
Paligan structures each investment through its own A separate company set up to hold a single investment, through which co-investors pool their tickets and appear on the cap table as one shareholder.More in glossary. An investor who joins a deal alongside a lead, usually with a smaller ticket and through the same vehicle.More in glossary participate in specific opportunities, not in a pooled strategy. The decision to invest is made deal by deal, with full visibility into what is being backed and why.
There is no cross-subsidisation. A weak deal does not get carried by a strong one. Each investment stands on its own, which means the standard for proceeding is necessarily higher. There is no portfolio math to fall back on.
There is no deployment pressure. We have no obligation to put capital to work on a schedule. We invest when a deal holds up to our analysis and pass when it does not, however long that takes, so a full pipeline never becomes a reason to commit.
Co-investors also see the company, the terms and the structure before they commit, which narrows the information gap that a blind pool leaves between manager and investor.
What This Means for Co-Investors
For co-investors, each opportunity is presented on its own merits, with the The investigation of a company before investing, covering its business, finances, legal position and team.More in glossary and structuring that has gone into it visible rather than implicit. The decision to participate is active, not passive.
That requires more engagement than writing a cheque into a fund and waiting. It also produces something the fund model rarely offers: a direct relationship with a discrete investment, with clear terms and a clear rationale.
Our co-investors are mostly Swiss family offices and finance professionals, the large majority of them based in Zurich. They come to us for access to deals they would otherwise not see, and they have the experience to judge each one on its merits, which is what makes a model built on individual decisions workable.
The Standard That Makes It Work
A deal-by-deal model is only as good as the discipline behind it. Without the structure of a fund mandate, the constraint has to come from somewhere else. At Paligan, it comes from the investment process itself.
Every deal undergoes the same analysis regardless of how compelling the initial impression is. Business model, unit economics, market structure, founder dynamics, The record of who owns what in a company, including shares, options and instruments that may convert into shares.More in glossary history, exit pathways. We go deep before we commit, because there is no portfolio construction logic to compensate for a deal that was not thoroughly understood.
The deals we bring to co-investors are the ones that survived the analysis, whatever point the calendar had reached.
What the Model Costs
The deal-by-deal model has costs, and co-investors should weigh them before anything else. Each participant carries single-company risk with no portfolio to absorb a loss, and every deal comes with its own vehicle to set up, administer and eventually unwind. Co-investors also have to make a decision each time, which asks more of their attention than a single commitment to a fund.
| Blind-pool fund | Deal by deal | |
|---|---|---|
| When you commit, you know | The manager | The company, the terms and the structure |
| Pace of investing | Set by the deployment window | Set by the deals |
| A weak deal | Absorbed by the portfolio | Stands on its own |
| Risk | Spread across the portfolio | One company per deal |
| Decisions you make | One commitment | One per deal |
| Vehicles | One fund | One SPV per deal |
We accept those costs because they buy a direct line from the analysis to the decision. A co-investor who has seen the full case for a company and chosen to participate knows exactly what they own and why, and when a deal goes wrong, the reason is visible instead of being buried in an aggregate return.
Who the Fund Model Serves
The fund model persists because it scales. It allows managers to raise large pools of capital, deploy them efficiently, and generate fees along the way. Those are real advantages, for the manager.
For investors and founders the calculus is different, because visibility, alignment and conviction per investment are what the fund model trades away in exchange for scale.
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