---
title: "What Is Master-Feeder?"
term: "Master-Feeder"
description: "Master-feeder is a fund structure where one master fund holds investments and separate feeder funds pool capital from different investor types (US taxable, offshore, ERISA) into that master."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/master-feeder
---

# What Is Master-Feeder?

> Master-feeder is a fund structure where one master fund holds investments and separate feeder funds pool capital from different investor types (US taxable, offshore, ERISA) into that master.

**Master-feeder** is a two-tier fund structure in which feeder funds raise capital from distinct LP groups and invest into a single master fund that holds the portfolio.

### How it works

Typical setup:

- **Offshore feeder** (e.g., Cayman) for non-US and tax-exempt investors
- **Onshore feeder** (US LP or LLC) for US taxable investors
- **Master fund** (often Cayman) owns startup stakes and executes deals

Feeders buy interests in the master; economics mirror direct master investment after fees and fund expenses. [Blocker corporations](/glossary/blocker-corporation) may sit between master and operating companies to block UBTI for tax-exempt LPs.

GPs prefer one master portfolio to avoid duplicating diligence and capital calls across parallel funds. Legal and admin costs rise, but LP tax optimization improves.

### Why it matters

- **Founders:** Your cap table lists the master fund or a blocker, not individual feeders. Signing documents may reference multiple entities in the GP org chart.
- **Investors:** Choosing the wrong feeder creates tax friction. LP counsel reviews side letters and ERISA exposure before wiring.

### Common mistake

Assuming each feeder is a separate fund with different portfolios. In a classic master-feeder, feeders share one investment pool—only tax wrappers differ.

### Related ideas

See also [blocker corporation](/glossary/blocker-corporation), [ERISA](/glossary/erisa), [fund formation](/glossary/fund-formation), and [LPA](/glossary/lpa).

## FAQ

### What is master-feeder in simple terms?

Multiple feeder funds collect money from different kinds of LPs and pass it into one master fund that actually buys portfolio companies. Each LP gets economics as if they invested in the master pro rata.

### Why does master-feeder matter?

It lets GPs serve US taxable, offshore, and pension LPs with one portfolio. LPs care about which feeder they use for tax; founders usually interact only with the GP brand.


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Source: https://venturecapitaltracker.com/glossary/master-feeder