Beverly Hills-based venture capital firm Group 11 has sold a portion of its second investment fund to the New York-based private markets firm Stepstone Group and Palo Alto-based secondary markets firm Industry Ventures.
In a deal announced on Dec. 7, the firms acquired a 12% stake in the fund for $20 million, which values the portfolio at approximately $167 million or more, as secondary-market transactions often close at a premium compared to the net asset value.
Group 11’s second fund includes several of the venture firm’s unicorns, companies now valued at over $1 billion, such as the payment automation platform Tipalti and Westwood-based point of sale financing platform Sunbit.
While both merger and acquisition and initial public offering markets have slowed to a drip this year amid 22-year high interest rates, this deal allowed the limited partners who initially invested into the fund to sell their stakes either partially or completely and liquidize returns. According to Group 11, investors saw approximately three times their initial cash investment in net returns.
“We are confident that this is just the beginning of a wonderful and fruitful partnership with both of these prestigious investors and are delighted to continue delivering for our limited partners, proving yet again that Group11 can generate liquidity and outsized returns,” Dovi Frances, founding partner of Group 11, said.
The secondary market has been hot this year, with deals flowing with tech-focused venture capital firms like Group 11.
Despite broader tech-valuation downturn, the secondary market’s discounted prices remain attractive opportunities for equity acquisitions in companies staging a new wave of growth beyond current market turbulence.
According to the online publication Secondaries Investor the secondaries funds raised $37.2 billion in the first half of this year, up 29% from the same time last year.
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