TLDR:
- The VC secondaries market is booming in Europe.
- The uptick is being driven by VCs’ need to generate liquidity for their LPs.
Olav Ostin, managing partner at investment firm TempoCap, notes a significant increase in the popularity of secondaries — the sale of stakes in companies or entire VC portfolios. London-based investment firm Molten Ventures recently acquired a 19% stake in early-stage VC Seedcamp’s third fund for €8.5m, signaling a trend in the industry. The rise in secondaries is driven by VCs looking to generate liquidity for their LPs in a time of muted IPO markets and dwindling exits. VCs have the option to sell entire or partial stakes in portfolio companies, known as “strip sales,” which helps de-risk the fund. While some VCs prefer to buy stakes in whole portfolios, others opt to cherry-pick companies for acquisition. Continuation funds are another option for generating liquidity, where a new investment vehicle acquires portfolio companies from an existing fund. Despite the challenges, the VC secondaries market remains a buyer’s market, with strong interest from US players and big corporates in Europe.
