Industry Ventures works with founders, early investors and significant stakeholders to monetize a portion or all of their venture capital holdings. As the time to exit continues to lengthen, so does the time it takes for those who bore the most risk to be compensated. Industry Ventures focuses on offering these risk takers the ability to realize value sooner than may be possible in traditional capital markets.
Sale of Private Shares
Of all the people involved in a start-up, the initial company founders, management team, and early investors hold shares in their company’s stock longer than any other shareholder. However, as a venture-backed company matures the shareholder may transition to a reduced role to become less involved or completely un-involved in the day-to-day operations of the company. These shareholders may seek to diversify their personal portfolios or gain liquidity by selling some of their shares.
Engaging a secondary fund to facilitate the sale of private shares may better align the interests of the shareholder with the venture investors who hold preferred shares. The receipt of some early liquidity may encourage the shareholder to work patiently to affect a longer-term vision for the company, rather than to advocate for a shorter-term exit such as a premature trade sale. By supporting the sale, the venture capital investors signal their support of the shareholder, potentially buoying their attitude.
When a shareholder desires to sell a portion of their stake in the company, a secondary fund will typically purchase shares of stock directly. Secondary funds tend to purchase shares in venture-backed companies that have demonstrated strong progress and positive momentum, not failing companies.
The purchase of shares enables the secondary fund to align the interests of the Board of Directors with the shareholders.
The shareholder achieves some early liquidity.
Management incentives aligned with investors to affect best outcome for the company.
Working with Industry Ventures
Industry Ventures has a dedicated team that will work closely with the founders, management teams and early investors to complete a timely transaction. Our experience and knowledge allows us to move through the process quickly—from portfolio evaluation, to the issuance of a Letter of Intent (LOI), through final due diligence, legal document preparation, and deal consummation.