Rachel Hansen’s Post

Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms Alpha Partners, SignalRank and now SaaS Ventures help seed VCs pay for shares when big VCs try to price — or push — them out Lee Edwards, partner at Root VC, has a saying at his firm that “pro rata rights are earned, not given.” That may be a bit of a stretch since pro rata refers to a term that VCs put in their term sheets that gives them the right to buy more shares in a portfolio company during consequent funding rounds to maintain an ownership percentage and avoid dilution. Still, while these rights are not exactly “earned,” they can be expensive. One of the latest trends in VC investing these days are funds dedicated to helping seed VCs exercise their pro rata rights. https://lnkd.in/dRM3RvdA By Christine Hall

Today, along with my Partner Liza Benson, I am thrilled to share the final closing and launch of MV Core Fund III! With $230M in fresh capital, our latest fund brings the firm’s total assets under management to more than $500M. Thank you to all of our investors, strategic partners, portfolio companies and friends of the firm - you are the foundation that propels our journey forward and we celebrate this milestone together with you! And of course, a huge thank you to the best-in-the-business Moderne Ventures team - your hard work is what keeps us growing and delivering results, quarter after quarter. Today’s venture investing environment is among the best we’ve seen in decades and we are thrilled to have fresh capital to deploy while continuing to scale our one-of-a-kind industry immersion program, the Moderne Passport, to help create customers for our companies and value for our strategic partners and the Fund. Even after two decades of venture investing, we are more inspired than ever for the innovation that lies ahead. Let’s GO! 🚀 Read the full press release here: https://lnkd.in/gimNQWbe Check out these stories featuring our news: The Wall Street Journal: https://lnkd.in/gszsXk3m Axios: https://lnkd.in/g_sEfta2 Crain's Chicago Business: https://lnkd.in/g6iy4wf5

It is no secret that many VCs are facing pressure from their LPs to return capital as LPs have become overallocated to private assets in recent years. The problem is exits are few and far between in the current market with already-low counts of M&A transactions dropping by about 6.5 percent, IPOs dropping by nearly 40 percent and SPAC deals dropping by one-third from Q4 2023 to Q1 2024, according to data from CB Insights. That's why Dan Engel told me he "decided to get creative." His firm Santa Barbara Venture Partners closed out Q1 2024 with four exits from its vintage 2020 debut fund, three of which happened in the span of just four weeks. Engel leveraged the secondary market, a long-stigmatized strategy, to achieve gross IRRs of 33 percent and 44 percent on partial sales of his firm's stakes in two companies. He told me that the strategy has been supported by other GPs in the industry, albeit quietly. "I really don't get why other VCs aren't doing the same. It's a strategy that some are quietly agreeing makes a lot of sense, but they aren't going to get loud about it because it will make them look bad." Read more on Venture Capital Journal. #venturecapital #secondaries

The gold rush into venture by 'tourist VC's' from 2018-2021 has created a massive liquidity mismatch between fund sponsors and their LPs. The managers are focused on vanity metrics such as MOIC while investors are hoping for liquidity. When your fees are a percentage of AUM, this creates a powerful incentive to push your head in the sand and hope fair value eventually catches up. I think Sara Ledterman is spot-on here. Accounting firms all over the world will be FORCING managers to take write downs over the next 12 to 18 months. Opportunistic buyers of these assets should be in a fantastic position to acquire early-stage equity in future unicorns at fire sale prices!

Norwest Venture Partners is breaking records as it raises $3 billion for his 17th vehicle! Norwest Venture Partners is making headlines once again as they raise a staggering $3 billion for their 17th fund, maintaining their fund size despite the current market downturn. Founded 65 years ago and backed solely by Wells Fargo, #Norwest Venture Partners has been a powerhouse in the #VC space. With a legacy of success and innovation, Norwest is led by senior managing partner Jeff Crowe, who has played a pivotal role in the firm's growth and impact. Backed solely by Wells Fargo, Norwest's latest fundraise of $3 billion is a testament to their continued strength and resilience in the face of market challenges. Despite the downturn, Norwest remains committed to staying competitive in the dealmaking environment, focusing on growth equity, healthcare, and investments in regions like India. Norwest's diversified approach sets them apart, allowing them to navigate market fluctuations with agility and foresight. Operating globally with investments in North America, India, and Israel, Norwest's multi-strategy fund encompasses early-stage and growth equity businesses, with a recent addition of a biotech team to enhance their healthcare practice. The article on TechCrunch in the first comment. Want to stay up to date with the market? Here my newsletter: - Linkedin: https://t.ly/s541W   - Substack: https://lnkd.in/dzfGJzmW

When to sell? Venture capital isn’t just about picking the right horses. It’s also about helping them jump over dozens of hurdles, watching them win a bunch of races — and knowing when to stop betting on them and cash in the winnings. How exactly to do that last part is a matter of some debate among Europe’s seed funds these days. Oliver Holle, managing partner of Vienna-based seed investor Speedinvest told Amy Lewin earlier this year he wished his firm had “sold more” when up rounds were bountiful. (His portfolio includes unicorns like wefox and GoStudent.) “We’d settle on selling 20 or 30% of our shares, or say ‘Let’s make sure we at least have our money back’. In hindsight, that’s not good enough,” Holle said. How do you get more value from your investment? Follow a successful #businesstransformation recipe, focus on building disruptive #digitalbusinessmodels. #designsmarterbusiness #transformyourbiz https://lnkd.in/ekuyJsv9

Just reading, that Index Ventures has raised $2.3bn for their new fund… (BTW Jan Hammer invested in #Adyen, which became I think his best Investment) When I read this kind of funding news, I am always wondering why the Dutch 🇳🇱 were able • to build big global banks, at least in the past (like #ABNAMRO, #ING and #Rabobank used to be) • to build big multinationals like #Shell, #Unilever, #Philips etc. • to build complex chipmakers like #ASML and even became leading in such a challenging industry. • to create new companies like #Booking or #Adyen But why were the Dutch not able to build a company like Index Ventures, despite our history of being • financiers and merchants; with a DNA of selling and buying, than producing (#Philips and its spinnoff #ASML seen as exeption to the rule?) • and despite the enormous amount of pensionfund money (#ABP, #PGGM etc.) which seems to me a #competitiveadvantage in comparison to other countries… What are the reasons for having missed this opportunity? Why were we not able to build a fund like #IndexVentures? Because of London, being the Financial center? (But Index started in Geneva) Because of regulation? And if those Dutch pensionfunds would allocate substantial amounts, like the Nationaal Groeifonds, would it still be possible to create something simular? A penny for your thoughts; Constantijn Van Oranje-Nassau, Maurice van Tilburg - Glimne 🏳️🌈 , Rinke Zonneveld, Willem Schramade Or Jan Hammer or those from the sector itself? #nlgroeit, nlgroeit #InvestNL, NLinvest #groeifonds, Nationaal Groeifonds #SuperReturn

When Limited Partners and the general ecosystem discuss #european #venturecapital, Index Ventures and Accel are always mentioned. Index Ventures also seem to be increasingly present in the United States in the San Francisco Bay Area and New York City. Combined with the firm’s existing $300 million Origin Seed fund Index Ventures is deploying $2.6 billion in capital to back founders from seed to IPO. This brings Index Ventures’s total capital raised since its founding to $15 billion! Across nearly three decades of investment, Index Ventures has supported 108 #unicorns, 57 IPOs, 200,000 jobs, and has invested in #European and #UK companies such as DeepL. Revolut, DataSnipper, Tacto, Cradle, and Cloover.  #fundraising #europe #unitedkingdom #alternativeassets #privatemarkets #venturecapital #fundmanagers #capitalmarkets #limitedpartners #index

We often tell founders to focus on what they are great at, and not lose that focus. We made today’s decision, so we lead by example. Learn more about our team’s decision to re-focus our efforts on our core strategy, early-stage technology investing. #VC #VentureCapital #investing #startup #entrepreneur https://lnkd.in/etkMfY_7

Growth equity is a unique form of private equity where the fund invests in a growing business while the founders and management team stay on board. This isn't for startups or early-stage ventures; it's for established companies with solid returns and a dedicated team that isn’t ready to retire. Positioned between private equity and venture capital—growth equity supports businesses that are scaling up with strong revenue and profit.