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Why are Discounts BIGGER for Skip the J-Curve: An Intro to Venture Capital Secondary

Why are Discounts BIGGER for Fund Secondary than Company Secondary?
Fewer Buyers, More Arbitrage
Because there are fewer buyers specializing in Fund
Secondary and because many sellers are competing
for liquidity, buyers have greater leverage relative to
sellers. Fund Secondary is a buyer’s market.
Basket of Assets, Harder to Value
Fund Secondary is often heavily discounted because
it’s more complex to evaluate a basket of assets
than just a single company. As former managers and
LPs in over 40 venture funds, PVC has extensive
experience evaluating multi-asset portfolios.
Fund Secondary is a
buyer’s market…
but only for buyers
who know what
they’re doing.
Unicorns Matter, Horses Discounted
Larger companies close to IPO or acquisition are in
greater demand; smaller companies that are still
growing are in less demand. Multi-asset portfolios
are valued primarily based on current unicorns;
future unicorns and other non-IPO winners are more
heavily discounted.

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