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December 18, 2023
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LA Business Journal: VC Firm Trims Second Fund Share

  • Beverly Hills-based venture capital firm Group 11 has sold a 12% stake in its second investment fund for $20 million to Stepstone Group and Industry Ventures.
  • This deal allowed the initial investors in the fund to partially or completely sell their stakes and liquidize returns, with investors seeing approximately three times their initial cash investment in net returns.
  • Despite broader tech-valuation downturn, the secondary market’s discounted prices remain attractive opportunities for equity acquisitions in companies staging a new wave of growth beyond current market turbulence.
  • Secondary funds raised $37.2 billion in the first half of this year, a 29% increase from the same period last year.

Group 11’s second investment fund includes several noteworthy companies, such as the payment automation platform Tipalti and Westwood-based point of sale financing platform Sunbit, that are valued at over $1 billion. The acquisition comes at a time when both merger and acquisition markets and initial public offering markets have slowed down considerably due to 22-year high interest rates.

“We are confident that this is just the beginning of a wonderful and fruitful partnership with both of these prestigious investors and are delighted to continue delivering for our limited partners, proving yet again that Group11 can generate liquidity and outsized returns,” said Dovi Frances, a founding partner of Group 11.

The secondary market, which involves the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds, has been thriving this year. This can partially be attributed to its discounted prices, which make it an attractive opportunity for equity acquisitions in companies aiming for growth beyond current market turbulence. According to the online publication Secondaries Investor, secondary funds were able to raise $37.2 billion in just the first half of this year, marking a 29% increase from the same period the previous year.

Despite the broader tech valuation downturn, deals are flowing with tech-focused venture capital firms like Group 11, reflecting the resilience and potential of the secondary market.

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