When a Limited Partner makes a commitment to a venture capital fund, the Limited Partner contractually agrees to fund investments at the discretion of the General Partner. During the investment period of a venture fund, the General Partner has the right to “call down” committed capital from its investors when it is necessary to finance new or follow-on investments in portfolio companies. In some situations, a Limited Partner may be unable to meet its capital call obligations thereby defaulting on its commitment. After discussions between a firm’s Limited Partner and General Partner, the two parties may conclude that a third party ought to acquire the Limited Partner’s interests and relieve that Limited Partner from any future financing obligations. The General Partner gives consent to the Limited Partner to allow the transfer to the secondary buyer.

This transaction is very straightforward: the secondary fund simply arranges to acquire a Limited Partnership interest, including both existing and future investments, and the sale is consummated by a single cash payment to the Limited Partner. The transaction remains discrete to protect the firm’s and Limited Partner’s reputation.

Industry Ventures has a dedicated team that will work closely with the General Partner to Limited Partner to complete a timely transaction. Their experience and knowledge allows them 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.

Industry Ventures, L.L.C. is a leading investment firm that capitalizes on inefficiencies within venture capital and technology growth equity. The firm invests in both secondary and primary opportunities, including direct portfolios, secondary directs, limited partnership interests and other special situations. Headquartered in San Francisco, with offices in the Washington, D.C. area, the firm manages more than $450 million of institutional capital.