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Today on The Exchange , we ’re delve into sequel funds , reckon down through some of our favorite diachronic Exchange entries , and discussing what we ’re excited to account on for the rest of the year ! — Alex
Continuation funds
Continuation seemed like an apt paper from our perspective . It is also a very topical one : “ The not bad author of liquidity now is go to be continuation funds , ” VC Roger Ehrenberg predicted in a recentepisodeof the 20VC podcast .
In face you are n’t familiar with the condition , let ’s turnto the FTfor a definition :
Continuation investment trust , which are common in secret equity [ PE ] but uncommon in venture uppercase , are a secondary investment vehicle that countenance them to “ readjust the clock ” for several age on some plus in old funds by selling them to a new fomite that they also verify . This help a VC fund ’s backer , make love as “ limited partner , ” to roll over their investment or departure .
If you have been fall out the last few months of speculation capital activity , the “ why now ? ” is well-heeled to answer . As the StepStone Ventures squad told our confrere Becca Szkutak in herDecember 2023 investor study : “ With portfolios awash in unrealized value , few immediate outlet opportunities , and longer hold periods on the purview , GPs are begin to get originative for generate liquidity . ”
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In pattern , a continuation stock sees unexampled investors invest in existing portfolio , but “ it reflect today ’s valuations , ” Ehrenberg said . This repricing and the potential conflict of interest group around it sound challenge in theory , but Ehrenberg does n’t cogitate so . “ You have final raw investor looking at a portfolio , so they ’re the monetary value setter , not the exist director . ”
It ’s not just very large funds likeInsight PartnersandLightspeedthat can explore this option , either . “ It ’s a viable strategy for a decent belt of the speculation diligence , ” Ehrenberg say 20VC host Harry Stebbings .
Whether it ’s lengthiness funds , strip sales or secondary , there ’s a clear impetus for VC to take care for solutions to its often poorly - timed Hz , as we had already find out with therise of lasting capitaland publicly list funds . A vernacular thread in today ’s economy is that project and companies are n’t given the time they require to fully succeed , so even if it supposes a temporary discount , it ’s good to hear that final investor are inclined to give portfolio more metre to glow .
RIP The Exchange
From its outset , the $ 100 million ARR club and the early pandemic days replete with strain market collapses and reverence , The Exchange was around to chronicle the 2020–2022 startup boom , and its later finale . We went from gibe monster round and a blizzard of IPOs to watching venture capital dry up and startup exits become rarer than gold . It ’s been wild .
Below is a list of some of our favourite Exchange entry . Of course , we could n’t go back through the entire archive — which you may findhere — so consider this a partial download of the hits :
We’re not done
While The Exchange is shuttering , we still have big plans for coverage this year . gratefully we ’re both still at TechCrunch , so you are far from rid of us . Alex wants to work on unicorn health , the DoS of debt funding in 2024 , and how AI will determine leverage at the OS layer . Anna is curious about AI hubs beyond San Francisco , GP stake investing and whichever S-1 we can get our hands on .
