Secondaries are breaking into the mainstream

The whole point of investing is to hopefully get your money back at some point. But what if, as we’ve seen, the usual routes to doing that are effectively blocked off? Ideally, a VC might want to their startup to go public, welcoming in hundreds of thousands of new investors via an IPO and make their money back, at many multiples, that way. Or they might want a bigger fish to come along and acquire the startup outright at a higher value, providing their returns that way. 
But IPO’s have been all but dead for a few years now, and despite previous predicitons that this might finally be the year they come back in earnest, that has not been the case. But people still want their money back, so they’re turning to the secondaries markets, where they can sell their shares in startups outside the context of a larger liquidity event that is out of their control. Secondaries markets have grown rapidly and continue to do so. Their visibility, and the attitudes towards using them, have also changed such that investors are much more comfortable imbedding them as part of their portfolio management strategies.
My guest today is Laurence Levi, partner at VO2 partners, a boutique advisory firm that acts as a broker-dealer for secondaries transactions, as well as a turnkey portfolio management service provider, focusing strongly on corporate VCs.

We talk about how the use of secondaries markets have been on an explosive trajectory, and hav been largely destigmatised, whereas it used to be something many might have considered as an outlet for which things are going badly.
We touch on how the nature of the markets themselves have changed, whether the power balance between buyers and sellers have shifted amid the increase in activity, and where the trajectory is set to go even if other exit routes come back.
We also talk about how startup founders may be feeling about having new shareholders who they never previously envisioned as a result of them buying up shares on the secondaries, how valuations or discounting practices have changed in recent years, and much more.

But first, I talk to GCV’s Kim Moore about how CVCs are opting to sell off parts of their portfolio’s via secondary transactions in order to pivot to AI.

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