TLDR:
- Venture capital group G Squared has raised $1.1 billion for its latest fund, tapping into increasing investor demand for buying pre-existing stakes in start-ups.
- Startup failures in the U.S. surged by 60% in the last year, including high-profile casualties like Tally and WeWork.
Venture capital firm G Squared has successfully raised $1.1 billion for its latest fund, fueling investor interest in its unique strategy of acquiring pre-existing stakes in start-ups. Unlike most venture capitalists who focus on new shares, G Squared primarily invests in existing shares directly from start-up employees and investors looking to sell some of their holdings in a flourishing secondary market. The firm’s sixth fund, similar in size to its previous one, now boasts $4 billion in assets under management.
The recent surge in startup failures in the U.S., with a 60% increase in the past year, has raised concerns about job losses and economic impact. Among the notable casualties were Tally, a financial technology company, and WeWork, a desk rental company. The slowdown in funding for early-stage AI startups has fueled fears of a tech bubble burst, though experts suggest that the failures are a natural part of technology evolution, creating opportunities for innovation and talent acquisition.
The rise in start-up shutdowns has come amid a downturn in public listings and takeovers, making it difficult for shareholders to sell their stakes. G Squared’s success in the secondary market highlights a changing landscape in the venture capital world, where traditional growth managers are facing pressure to return cash from institutional investors. As G Squared’s founder Larry Aschebrook stated, the firm’s focus on secondaries is finally gaining recognition and paving the way for future growth and investment opportunities.
