through secondaries in hard-to-access technology companies
OUr THREE strategic PILLARS
Proprietary access to top-tier companies with value unrecognised by the market at a late stage of growth and with a clear pathway to profitability
Addressing the liquidity challenges that come from an extended life in private markets, outside of competitive primaries
EPICENTRES OF TECHNOLOGY
Backing companies solving the the world's largest problems in regions and sectors poised for rapid growth
A GROWING OPPORTUNITY IN DIRECT VENTURE CAPITAL SECONDARIES
ALEXANDER ASSIM | PARTNER
In a market where valuations and returns have shifted from public to private markets – and where capital inflows to VC are driving record competition for access to primary rounds in high-profile companies – our team at Alicorn leverages a unique investment strategy: by using our proprietary access to secondaries and investing in harder-to-access private companies.
We focus on VC-backed technology firms at a late-growth stage and work with their leadership teams, existing investors, and other stakeholders, to facilitate secondary investments, in a bid to solve liquidity requirements. This is in addition to our participation in unique primary rounds.
By targeting under-the-radar companies, we circumvent the demand for larger firms in the mainstream, and we invest instead in mature, high-growth, high-impact private companies with a clear pathway to profitability.
While some companies will look towards an initial public offering or merger and acquisition as the culmination of their growth strategy, others are now choosing to defer their IPOs, and stay private for longer.
In fact, in the past two decades, VC-backed companies in the US had a median age of 11.4 years by the time they went public, nearly five years longer than the average age of companies pre-IPO in the decade prior.
This decision to remain private for longer increases the desire for liquidity by invested parties, thereby creating a demand for a secondary market.
Secondary investments are proving beneficial to VC-backed companies that aim to provide liquidity to key stakeholders and adjust their capitalisation table for new long-term investors.
Our portfolio companies are experiencing late-stage growth, between the Series C and E stages, and turning to the secondary market to address liquidity challenges because of their extended life in private markets.
Overall, they are leveraging the tailwinds of growth spurred by primary rounds and are moving past the initial stages of business and product development, which are often the riskiest stages in the life of a start-up. Access in the late growth stage is hugely competitive and usually reserved only for the largest names in VC. Using secondaries as a unique entry point we are able to access world-class ultra-competitive start-ups.
Companies are creating most of their valuation in private markets before an IPO. Knowing when to tap into this stage is therefore critical. At Alicorn, we invest on a two- to four-year timeline with a clear runway for value accretion.
Our access to VC secondaries come by way of our senior team’s relationship with VC managers, corporate leaders, and stakeholders, as well as our own investment into VC-backed companies. Over the years, we have built extensive knowledge of and experience within the secondary market through these connections, affording us information asymmetry in a highly competitive investment landscape.