Viswanathan: Venture secondaries market grew two orders of magnitude in 20 years
Ravi Viswanathan · Ravi Viswanathan – Venture Secondaries and Growth Capital at NewView (EP.327) · Jul 13, 2023 · at 3:55
Ravi Viswanathan, founder of NewView Capital, reflects on how venture secondaries have evolved since he first worked on them at Goldman Sachs in the early 2000s.
0:00 / 0:10exact quote · 10.6s
720p mp4 · rendered on demand · StarZero watermark
“If you fast forward 20 years, we spend a good chunk of our time focused in that market. It's changed in that it's probably two orders of magnitude larger in terms of market size.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Ravi Viswanathan
Venture secondaries are only 0.3% penetrated, representing a $100B opportunity
“Venture is 0.3% penetrated. So in that market, our estimation, we've done some analysis, 50 to a hundred billion, just In what we're doing.”
Traditional venture operating partners lack full status and check-writing power
“Probably the biggest difference is they're not full partners, and sometimes they're not in the full partner meetings, and they don't have the check writing capability in that if there's a follow-on or some financing, they have to go back to the partner group o…”
Traditional venture capital operates on an 'IPO or bust' ethos
“Since the dawn of venture capital, it's been IPO or bust. You're going to have these, we call them needle movers, these iconic companies that really define venture capital and define venture capital firms. The quest is about that versus we've got really good c…”
Orphaned mid-stage portfolio companies represent a dislocation across the VC industry
“I tested this with a lot of my peers and found that this was not just unique to NIA. This was really, this dislocation was happening across venture, which also made sense.”
Unlike VC, buyout private equity thrives on multi-tiered secondary sales
“On the flip side, if you go to the buyout world, it's this evolution of man, the lower middle market folks. Get companies, and they sell to the middle market folks, sell to the large cap folks, and you have that virtuous cycle. And actually, you have situation…”
Early venture secondary LPs expected steep discounts for high-quality assets
“Two pushbacks from new LPs. One, this was such a foreign concept. They'd never seen such a big venture secondary that wasn't a closeout fund or something else. That was one. The second is they were trading in discounts that were far greater than the discount f…”