Since the burgeoning growth of the initial public offering markets in the 1980’and ’90’s, the conventional mechanism for venture capitalists to exit their investments in emerging private technology companies has been the public market. Since the tech bubble burst in the early 2000’s followed by the financial crisis in 2008, however, the tech IPO alternative has slowed dramatically, and incremental regulatory constraints have made the situation even worse. As a result, many private tech companies have either chosen to remain private for far longer (thereby creating “unicorns”) or have chosen to sell out to larger tech entities.
Unfortunately, not all VC’s have been able to enjoy either of these alternatives, and the lack of the conventional IPO exit has made venture investing much less appealing. Too many investors in venture funds have found themselves “stuck” for far longer than they desired. A recent presentation by Pitchbook makes this abundantly clear, as they project that AUM for venture firms will grow only negligibly between 2025 and 2029 (PitchBook, 2029 Private Market Horizons, received via email, May 2025; pitchbook.com).
As is always the case, necessity is the mother of invention. That invention was NAV financing, but it is actually nothing new. New York Private Finance has been offering this solution to locked-in LP’s and GP’s for a decade now.
NYPF can take a diversified portfolio of venture capital interests (whether partnership or LLC structures) and lend against it, offering tenors as long as six years. This enables investors in heretofore illiquid funds to gain some liquidity, while waiting for fund managers to determine the optimal time for a general liquidity event. As many investors use liquidity events to fund new capital calls, our loans also facilitate incremental investment without the pain of selling at a suboptimal time. Truly, an opportunity to have your cake and eat it too, but with much less risk to one’s waistline.
Please contact us to learn how we can help.
