The Secondaries Outlook for Venture in 2024

The venture capital secondaries market, long considered an underserved area, saw notable changes in 2023 that could make 2024 an opportune time for both buyers and sellers.

After a period of depressed activity, new entrants to the buyer side entered the market in the second half of 2023, drawn by attractive pricing. This influx of new buyers created more bidding dynamics and liquidity at a time when traditional auction processes had stalled.

For VCs facing overvalued late-stage portfolios, secondary sales represent an appealing option to generate liquidity and rebalance exposures. As the public and private markets correct, traditional exit options remain limited in 2024. But LPs remain active secondaries buyers, providing avenues to realize value from mature fund stakes. Some growth in secondaries is based on the valuation bubble for early-mid stage companies bursting. However, the secondaries market is the only alternative asset class that grew steadily over the past 5 years.

VCs can also leverage continuation vehicles on the GP-led side to extend the life of top pre-IPO companies most impacted by the correction. By spinning out winners into single asset continuation funds, the investment horizon can be extended 5-10 years to maximize returns.

As portfolios struggle with overvalued late-stage exposures, secondaries present pathways to recycle capital and isolate winners until markets normalize. LPs remain active buyers, while continuation strategies offer upside uncapped by fund life.

While optimism around a mid-2024 recovery has been expressed before, factors like the Fed's predicted 2023 rate cuts and a stronger second half for secondaries in 2023 lend credibility this time. Public equity markets also look healthier, which could drive LP selling as allocations normalize. Meanwhile, new specialized secondaries buyers entered in 2023, providing more options for sellers. If these trends persist into 2024, they could combine to unlock additional venture secondaries opportunities.

VCs would be remiss not to evaluate secondaries amid today's challenges. The options provide potential balances to overvalued exposures. With specialization proliferating, the possibilities are expanding.

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This past week witnessed a staggering $900 million in funding raised by startups, with a significant portion directed toward Artificial Intelligence (AI) ventures. Notably, one group is channeling these funds into the development of humanoid robots, blending AI with robotics to create cutting-edge innovations.

Early Stage:

• Interview Kickstart: Secured $10 million in funding, empowering individuals with essential tech skills through its SF-based platform.

• Rivalz: Raised $6.1 million in seed funding, revolutionizing the snack industry with its functional and nutritious offerings.

• Jamix: Closed a $3 million Pre-Seed round, aiming to streamline workplace productivity with its AI-driven assistant for app integration.

Growth Stage:

• Figure: Closed $675 million Series B round, amassing $854 million in total capital, this AI Robotics company is pioneering the development of autonomous general-purpose humanoid robots.

• Glean: Raised over $200 million in Series D funding at a $2.2 billion valuation, this Palo Alto-based AI enterprise search startup is transforming information discovery.

• Parspec: Raised $11.5 million in seed funding, simplifying the selection and sale of construction products with its AI-powered software platform.

• Campfire: Secured $3.5 million in seed funding, providing accounting software tailored for startups and midsize companies in San Francisco.

As the adage goes, "the more things change," and indeed, we are witnessing an era of rapid AI evolution where startups are securing substantial investments by showcasing their unique solutions in a competitive landscape.

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Cultivating Connections: Our Approach to Events and Networking

At our core, we are not an events company, but we are passionate about fostering and empowering communities. As we enter the thick of the investing season, we're witnessing a surge in energy at events and deals on the table.  Due to popular demand, we have decided to share our events calendar, which has recently undergone some changes and is now solidifying.

The massive center of gravity in Silicon Valley this month is the nVidia GTC conference. With the hype surrounding GPUs, this event is poised to be the epicenter of the tech world. Ignite will be co-hosting a private networking event with Fusion Fund on the 19th. If you are an investor, AI founder, or a strategic player in the infrastructure space, please reach out to us at [email protected]. We will be sharing an events link shortly.

Looking ahead to April and May, our schedule remains adaptable. We are strategically planning The Path Ahead summit around other key industry events, allowing us to build on the energy and momentum generated by the larger tech community. Our objective is not to fill the calendar, but rather to host events that serve as a means to an end: strengthening our business through community building and collaboration.

By working together with partners, we aim to amplify our collective efforts and increase our reach in the industry. Stay tuned for more updates and exciting opportunities to connect with fellow techies in the Bay Area.

Bay Area Founders Pitch Day | Feb25

Llama Lounge | Feb29

Save The Date: April 11, 2024

The Path Ahead Summit will always be free for accredited investors. Please RSVP early through the link below to save your spot.

Interested in sponsoring the next Path Ahead? Please view our Sponsorship Prospectus.

Upcoming Events:

• Mar07: OFF Angel Group Pitch event (Palo Alto)

• Mar12: LG Founders & Funders Mixer (Los Gatos)

• Mar13: AI & Supply Chain event  (Palo Alto)

• Mar18-20: nVidia GTC (San Jose)

• Mar27: Unstructured Data Meetup South Bay (Sunnyvale)

• Mar28: AI INVESTMENTS with BLITZSCALING & REBELLION (Webinar)

Join Us in Building Our Community

We thrive on fresh ideas and new perspectives. Participate in the next Path Ahead. Whether you want to present, sponsor, or volunteer, we would love to have you join us.

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