INVESTMENT ADVISORY FROM SEED TO LATE-STAGE
THE PRE-IPO MARKET CONTINUES TO GROW
Venture capital and private equity firms are funding their successful companies longer though mega-rounds. The extended timeline has nudged many early employees and investors who participated in the seed, Series A/B/C rounds to seek some liquidity. This is accomplished through either arranging a purchase and sale or a specialty non-recourse financing solution. On the buyer side, traditional purchasers such as family offices, boutique asset managers and secondary funds are now competing with hedge funds, sovereign wealth funds, pension plans, private banks. Additionally, our network has seen a noticeable increase in transaction size which points to the activity from the institutional marketplace.
HIGHER EMPLOYEE STOCK AND STOCK OPTION VALUES
Employees now have an extended time to IPO, lower exercise of first-right-of refusal by the company (due to higher valuations and need to keep cash on balance sheet) and liquidity needs of employees (purchase of house, children etc). Recent layoffs across start-ups have also left ex-employees with the need to option exercise or lose years of work and increased holdings value. Additionally, there has been an increase in employees accessing pre-IPO secondary market to bridge the time to IPO. As early employee positions can be sizable, in the pre-IPO secondary market can monetize some value ahead of the unpredictable timeline.
