TLDR: Venture capitalists are turning to the discounted secondary market to return funds to their investors. The European secondary market has seen a surge in funds buying up shares on the secondary market, reaching record levels. VC funds need to free up cash and return money to their limited partners (LPs), but with the European exit market in a difficult spot, investors are resorting to selling off stakes in portfolio companies at discounted prices. The secondary share sales market in Europe is less established compared to the US but has seen rapid growth in recent years. However, the lack of obvious buyers for these shares remains a challenge.
Key points:
- Venture capitalists need to return profits to their investors, but the European exit market is in a difficult spot
- Investors are resorting to selling stakes in portfolio companies at discounted prices on the secondary market
- The secondary share sales market in Europe is less established compared to the US but has seen rapid growth
- The lack of obvious buyers for these shares remains a challenge for the European secondary market
Venture capitalists are facing the challenge of returning profits to their limited partners (LPs) amidst a difficult European exit market. With startup valuations depressed from their pandemic-era highs, investors are turning to the discounted secondary market to sell off stakes in portfolio companies. The secondary share sales market in Europe is less established compared to the US, but it has seen a surge in activity in recent years. However, the lack of obvious buyers for these shares is a hurdle for the European secondary market.
