Dear visitor,
If you are coming across those lines, you may have an interest for secondaries
The secondary market for startups has never been so active. We are seeing a huge supply coming from Traditional VC Funds and a lot of demand from Secondary VC Funds and Family Offices.
Secondary sales in VC-backed startups are a great way to access a company between two funding rounds, invest in "late-stage" startups or even access a new investment geography. On the supply side, having a "third exit option" provides a GP’s portfolio with a better return in many cases.
Secondary sales seem to be the answer to several pain points related to investments and exits, but you must be on the look-out for some pitfalls, such as the fact that the vast majority of secondary GPs cannot pay a broker fee, share carried interest, or invest through a SPV.
New Secondary VC Funds, especially in Europe, tend to believe that they should behave like a Traditional VC, with the same kind of teams, LPs or investment thesis.
But if your goals are to apply those rules again, why not just raise a new Venture Fund instead of creating a secondary VC fund?
After all, it’s not like there is a liquidity crisis on the LP side...
When a secondary investor is trying to access a deal, they will struggle to:
Why?