History usually tells us that, where venture capital leads, private equity follows sooner or later (if it generates the right return). However, in one regard, PE is pioneering while VC firms are in uncharted territory, that being buying assets from their peers.
Secondary buyouts have been a mainstay of the private equity industry for decades. In recent years, however, venture firms are increasingly picking up existing shares in secondary stock sales rather than injecting fresh capital.
Globally, firms executed almost 200 secondary venture deals in both 2015 and 2016, per PitchBook data, up from fewer than 90 a decade ago. That figure dipped slightly last year, but the 181 secondary VC deals completed in 2017 is still the fourth-highest total in 10 years. And while the number stands at just 80 so far in 2018, the sizes of the deals that are getting done has skyrocketed.