Investors Navigate Illiquidity in Venture Funds Through Secondary Deals
From the desk of Jim Eccleston at Eccleston Law
The Wall Street Journal reports that the current sluggishness in the venture market has left many investors in venture funds grappling with illiquid portfolios, making it challenging to ascertain their value. In response to this predicament, there has been a noticeable uptick in secondary deals, offering limited partners an avenue to extract cash without relying on traditional exits such as IPOs or company sales.
According to the Wall Street Journal, a recent example is the sale of a 12 percent stake in Group 11's second fund, totaling $20 million, to Industry Ventures and StepStone Group. This marks the third time Group 11 has engaged in a secondary sale of a stake in one of its funds since the previous year, resulting in a cumulative return of $96 million to the venture firm's limited partners.
This trend reflects a strategic move by investors to navigate the challenges posed by illiquidity, providing them with more flexibility in managing their venture fund investments.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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