LONDON, July 18,
2024 /PRNewswire/ -- Ben
Funk, partner at Launchbay Capital, a leading multistage
venture firm, today highlighted the rapid growth and potential of
private market secondaries as a key investment strategy for both
institutional and individual investors, looking for risk-mitigated
options.
"Private market secondaries have evolved from a niche market to
a mainstream investment strategy," said Funk. "We're seeing
unprecedented growth in this sector, with the market reaching
$132 billion in 2023, up from
$42 billion in 2015. This represents
a compound annual growth rate of over 15%, making it one of the
fastest-growing segments in alternative investments."
Recognizing the potential of the secondary market, several firms
have launched or are in the process of raising significant
secondary funds, including Blackstone, StepStone Group, and
HarbourVest. These funds are complemented by more focused players
like Launchbay Capital, 137 Ventures, and Manhattan Venture
Partners, which specialize in shorter duration funds and more
liquid secondary investments.
Funk also noted the growing interest from global family offices
and institutional investors. "We're seeing increased participation
from pension funds and family offices, which is boosting liquidity
in the secondary market. This trend is particularly notable in
emerging markets like Mexico,
where the venture secondaries market is projected to exceed
$1 billion in transaction volume over
the next 2-3 years."
This growth is driven by several factors:
- Higher Returns: Secondary funds often offer high
Internal Rate of Return (IRR), potentially exceeding the
performance of most public markets.
- Shorter Holding Periods: Unlike traditional private
equity funds with 10+ year lifecycles, secondary funds typically
offer 4-5 year investment periods, allowing faster realization of
returns.
- Attractive Valuations: The tech market adjustment of
2022-2023 has led to more realistic private company valuations,
creating opportunities for secondary buyers.
- Diversification: Secondaries allow investors to build
diversified portfolios of late-stage private companies, spreading
risk across multiple investments.
- Increased Transparency: New platform technologies like
Forge Global, Hiive, and Launchbay provide real-time data on
private company valuations, enabling more transparent and informed
decision-making. The valuation and performance of these
investments, as well as deals legal support, that are carried out
independently with firms such as Kroll, GreenbergTrauig and
regional specialists such as 414 Capital.
Funk cited successful case studies, including Airbnb and SpaceX,
where secondary investments yielded significant returns. In
Airbnb's case, investors in a 2016 secondary round saw a
substantial well documented multiple as a return on their
investment in just four years, when the company went public in
2020.
"At Launchbay Capital, we're leveraging our expertise and
technology to capitalize on these opportunities," Funk stated. "Our
team has developed robust due diligence processes and industry
networks that allow us to identify and invest in high-potential
secondary opportunities."
To learn more, please visit https://launchbaycapital.com.
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SOURCE Launchbay Capital