Talking Secondaries with Ben Slome of New Vintage Partners

Awesome. Okay, great. Well, I am glad to have Ben Sllo of New Vintage Partners with me for uh a little random walk conversation. Today's topic is is been a

conversation. Today's topic is is been a recent topic that's near and dear to Random Walk's heart, which is the secondary market and secondaries more broadly. Just really quick recap.

broadly. Just really quick recap.

Obviously, there is a recurring theme in the stuff, you know, that uh that that I write about is the no exits for private capital, which is extensive private equity, but also v uh you know, venture in particular, although really frankly

both. And so the traditional off-ramps

both. And so the traditional off-ramps whether through public markets or um M&A uh company led M&A or even you know sponsored M&A have just have not provided the liquidity that these asset

classes have generally come to expect and secondaries has have risen in in status and in opportunity as an as as stepping into that void. There are

obviously some, you know, I guess there's some there's some overhang there in terms of whether or not it's, you know, it's opportunism, whether it's really going to be a meaningful, you know, unlock for the liquidity in the ecosystem at large or it's really just sort of opportunistic stuff. But anyway,

that's why it's interesting. And so I'm glad to have Ben Som of New Vintage Partners, which is well, I'll give it I'll turn it over to him to sort of describe what it is and what they're doing, but suffice to say, it is

secondaries focused. So, thank you, Ben.

secondaries focused. So, thank you, Ben.

And why don't why don't you take it away just describing a little bit about what the fund is doing, what the strategy is, how you got there, and how long you've been at it for and we'll work from there. Sure. Well, first of all, Moses,

there. Sure. Well, first of all, Moses, thanks so much for having me on. Excited

to be here. I'm a religious reader and so it's a pinch yourself. Sacriiggious

readers, sacriiggious readers in in spirit, but always a pinch yourself moment when you get to participate in a medium that you consume as part of your information. So,

thanks for having me be here. So really

high level a little about us. We founded

the firm in June of 2023 just over $200 million of aum. We focus predominantly on secondary LP stakes in mature

venturing growth funds. Really the

reason and the genesis for that was in a prior life both mine and my partners we saw a gap in the secondary market that frankly had been born from a maturation

as you mentioned in in your opening remarks of secondaries and they've become very very large. But the dynamic as such is the capital has aggregated itself in really two handfuls of the

players in this space that build indices of private markets by deploying tens of billions of dollars every four years.

And venture and growth was really seen as just an afterthought. And we saw that that price and risk were really mis mismatched. and we decided to start

mismatched. and we decided to start looking for opportunities in the space on a deal-by-deal basis and found that there was a real opportunity to build an institutional business that prosecuted

that chasm between risk and price. So

just just to back up a second of all two things. One is is like you started this

things. One is is like you started this in September 2023 which is I think you know generally speaking before I would say reality set in on the industry the secondaries were going to be an

increasing part of it. So talk about a little bit about that like how you sort of came to the conclusion fairly early and then I think too is I guess what you mentioned before is just that you know where secondaries you refer to indexing

the industry. I assume you're talking

the industry. I assume you're talking about secondaries pre this turn right like you know but maybe I'm wrong but like dig into that a little bit more.

What does that mean and you know who who are the representatives of that? Sure.

Yeah. So, so maybe maybe let me take that second question first and I'll and I'll come back to to how we jumped in really when and this is this applies to

any sort of money management uh strategy which is the larger you get uh the the the less time and resources

you have to underwrite things from a very fundamental basis if they do not meet a certain opportunity of deployment. What I mean by that, a lot

deployment. What I mean by that, a lot of words, if you have a $50 billion fund, you don't have the time to look at a $50 million transaction, you need to

be deploying in five in in sort of $500 million, right? And that opportunity set

million, right? And that opportunity set lends itself to going and purchasing in areas where you don't need the same level of scrutiny that you do in our

market. And what I mean by that is what

market. And what I mean by that is what traditional venture and growth traditional secondary players do is they're buying enormous LP stakes and

GPL positions from folks that are in KKR and Blackstone that those funds themselves are 30 or$40 billion private equity funds. And so the stakes in them

equity funds. And so the stakes in them are really large. And the core and and the concept of what I'm really what I'm really starting to open up is when

you're buying a 15-year-old or a 12y old or name your vintage fund where the underlying fund where the chemical businesses or industrials businesses and

they've been around since 1945 and they have 50 years of audited IBIT financials from one of the big four the marks that that the managers KR or or any of those

large managers give you are pretty reliable within a pretty tight confidence interval. When you go to

confidence interval. When you go to venture and growth, we politely say that NAV is a fictitious concept. We often

see the same asset, the same company in different portfolios and the marks are three orders of magnitude different. And

so when you go to venturing growth and apply that we buy everything at a certain price is a really good way of getting yourself into trouble and impairing capital. And our job is really

impairing capital. And our job is really to understand truly what intrinsic value is at the company level. So going from the bottoms up company by company

underwriting them as a as a more traditional valuebased investor would underwrite them. Ebida multiples, cash

underwrite them. Ebida multiples, cash flow multiples. We really don't talk

flow multiples. We really don't talk about revenue multiples in our in our investment committees, right? And and we just understand what the intrinsic value of those companies are. And whatever

that buildup of value is that that that meets our underwriting and return hurdle is the is the discount. And that's a very different philosophy than I think a

lot of other secondary players apply to this space. So that was answering your

this space. So that was answering your question. Yeah. Yeah. No, I think I

question. Yeah. Yeah. No, I think I think it's helpful and I I think just just one point of clarification then a follow-up. So like first of all are

follow-up. So like first of all are you're buying you're buying you know an LP say an LP an LP stake in XYZ fund that has these 20 positions or are you

buying you know whatever you know a stake in XYZ company that's that's been private for a while or both? Now uh

we're buying LP stake in fund four of XYZ fund and if you think about what the the strategy in venture and growth is is NAV sort of looks like is flat right

they make 30 or 40 bets and by year five 10 of those bets have been zero written off by year seven you have really have one to five assets that are your fund

winners and these are by the time that we are looking at them at scale many hundreds of millions of dollars of revenue, if not more, significantly profitable and equally important for our

strategy as we're a five-year fund, not a a traditional 10 plus two-year fund.

So, liquidity is really important to us.

They're in the life cycle where liquidity is really on the horizon. And

how we price what we buy is we look at companies that represent more than 5% of NAV. And that is generally, as I've said

NAV. And that is generally, as I've said before, one to five assets that represent 80 plus% of the NAV. And then

there's 10 to 20% consist of the companies that were are good companies. They just weren't the breakout companies. So, they're

maybe the ones that you get your money back or it was a 2x return or even a 3x return, which if you're the venture fund, those are kind of like your failures. But for us, we're often not

failures. But for us, we're often not paying for those. Those are just option value. So even if you get your money

value. So even if you get your money back or even 80 cents on the dollar for those, that's where the convexity of our returns come from. So is it that's interesting. So basically, so you're not

interesting. So basically, so you're not underwriting, you know, you're underwriting four or five names in anybody's book. You're not necessarily

anybody's book. You're not necessarily writing underwriting all of them. That's

correct. Um and team I'd need a team of 200 if I wanted to do every single company, right? Every single portfolio.

company, right? Every single portfolio.

But but it's really but but I but the sorry not to interrupt you, but this is just an important an important point for us. It's it's just so critically

us. It's it's just so critically important because of what I said before about NAV and and not being able to really trust it. You really need to understand those one to five companies

at a an excruciatingly deep and detailed level to feel to know and feel confident that you're buying value. Cuz what I'm really

doing, if I'm going to simplify, is I'm really trying to buy a dollar for 60. I

hope that dollar goes to 120,1 130, maybe 140, maybe even $2 if things go really well. But what I'm really trying

really well. But what I'm really trying to do is make sure that dollar is worth at least 90. So I make my money on the buy and that's critically important.

Yeah. You and you have some right some of the expensive discoveries been, you know, been done, right? So you can see you can sort of derisk it a little bit and then you know rather than you're probably looking for more normally distributed returns over a shorter time

horizon like you know higher patting average lower slugging percentage. So

how many companies are actually in scope here? Are we talking like in other words

here? Are we talking like in other words you you say you know you're looking at the top five companies in anybody's fund like what is the universe of those top five companies? Is it is it 10

five companies? Is it is it 10 companies? Is it just like SpaceX Open

companies? Is it just like SpaceX Open AAI and a handful of others? Is it a hundred? Is it a thousand? Like how many

hundred? Is it a thousand? Like how many are we actually talking about? So, this

is this is a good question. So, what

what does the market look like? In the

past 18 months, we've seen about $60 billion of LP volume, and that was volume sent to us because it for for for

whatever reason, it had some elements of it that might have fit our strategy.

About at least 50% of that is sort of dead on arrival, right? Got a too young, the quality is not there. for whatever

reason. We have a, you know, a fancy funnel that that has a lovely graphic that tells you how we cut that down. But

basically from that sort of 50 billion, roughly 2 or 3 billion of that has been

of a quality and uh and and sort of makeup that we would consider of premier assets. And so those are

premier assets. And so those are anywhere from sort of however you want to cut that up and divide it by number of companies. But you can kind of think

of companies. But you can kind of think about it more of a there's 2 to3 billion every 24 to 36 months of exceptional

quality product that would meet our underwriting. Interesting. So, it's not

underwriting. Interesting. So, it's not it's not like you're just or maybe you are and they've been pushing out it too hard, but like in other words, you're not just immediately cracking open the tape and saying, "Okay, do you have one

of these 10 names?" If not, you know, move along. Yeah, that's correct. Right.

move along. Yeah, that's correct. Right.

There are companies in our portfolios that are the largest companies you've never heard of. I'll give you an example. CASA. You might, if you're a

example. CASA. You might, if you're a basketball fan and you live in Miami, you might know it because they just took the naming rights of the of the Heat Stadium away from

FTX. They are the are the world's

FTX. They are the are the world's largest multi-ervice provider. So, they

give IT services and cyber services to small and medium companies. They do$2.5

billion dollars of revenue growing 30 plus% incredibly profitable, right?

That's not an asset that people are like like Anderil or XAI or SpaceX that people are clamoring to get into SPVS, but it's just such an incredible

business assets like that. Interesting.

Yeah, that's true. I've never even heard of them. Um, and I guess so then what's

of them. Um, and I guess so then what's the profile of the seller in that case?

They've just been in the position for 10 plus years or they have other liquidity needs or like why would they sell? Yeah.

So, we buy from what we call non-financial sellers. people that are

non-financial sellers. people that are managing their liquidity for systemic reasons. That could be a new CIO has

reasons. That could be a new CIO has come into the system and wants to raise cash from the old CIO and redeploy in in his or her her new strategy. A teacher's

pension has decided that their private exposure is out of their portfolio targeted portfolio mix and they want to reduce private exposure. So, who are our

sellers? They're the large pension

sellers? They're the large pension funds, endowments, foundations that are have been systematically allocating billions and billions and billions of

dollars over the last 20, 30 years. And

95% of what they bring to market is the traditional large cap private equity infrastructure real estate. And then on

page nine of the of of the of the 250 line items that they want to sell is their venture and growth exposure. And

that's and that's where we focus in on.

And do you buy just one fund or do you have to buy it all? Like like how does it go? How does it work typically?

it go? How does it work typically?

Listen, every process is idiosyncratic.

We have looked at large portfolios in which we pick the three that we really like and we bid on those. We go through we work with private and large platform

style managers and go through their portfolio and say we like this one, this one and this one. and we help manage their liquidity and purchase it from there. It's idiosyncratic. What I would

there. It's idiosyncratic. What I would say is as a more blanket statement of how we approach the world is we're not large portfolio buyers because we want

to just cherrypick the highest quality and the highest quality is is exactly where you need to be in the venture and growth secondary world because if I'm sure you've heard the term zombie corns

or zombie funds and there's a lot of landmines in venture and growth even in the mature stages which is why it's just so critically important. So when Yale goes to market with their, you know,

with their privates portfolio, is that something my understanding I guess like both reading and just hearing some like they were very much taking an all or nothing kind of approach. So is that something did you look at that like or was that to the extent you're able to

talk about or was that just like out of scope cuz that's the sort of mega buyer that you avoid? Certainly not out of scope. We did look at it. We

scope. We did look at it. We

participated in that process and those are the types of processes where we do participate and try and find areas where there are particular spots in that portfolio that we can be a solution for.

Interesting. Do you find like is this process like uh you know of the of the endowments and institutionals sort of rotating away? Is it speeding up? Do

rotating away? Is it speeding up? Do

they feel like they're doing because they want to or they have to? Has it

changed at all or is it like in other words the industry story is it's like no this is just strategic realignment.

We're overexposed. We want to you know but we're not in any rush. whereas, you

know, you could read between the lines and say actually, you know, there's a catalyst underway, which is, you know, the endowment tax, you know, the gravy train is ending, etc., etc. Like there they actually they're, you know, they're

they're less in the cat bird seat than they want to let on. I don't know what's So, it's very interesting when brand names like Yale and Harvard employ the

secondary market, it certainly paves the way for smaller institutions to feel comfortable doing the same. So that was I would you know when we look back on

the on the evolution of the secondary markets I do think the Harvard and Yale endowments will be part of the of of the inflection point. What I think is really

inflection point. What I think is really happening and this is my opinion and and our firm's opinion is the secondary market before in the last 10 years has

really been seen as a pressure valve of I need liquidity for whatever reason.

And there are these kind of on the side firms that traffic in this stuff and we can go to them and we're probably going to take a big discount but you know say

lavie and we want the money. Now what

you are now seeing and you see it in some of the the premier venture primary venture funds is you is you are seeing that the primary venture structure and growth structure and even private equity

structure documents are elongating the fund life. So the traditional 10 plus

fund life. So the traditional 10 plus 2-year extensions is now becoming a these are going to be we're telling you these are going to be 15-year funds. And

so the secondary market in our opinion is moving from a pressure valve nice tool to know exists to a bonafide shadow

capital market in and of itself where investors can now feel a lot more comfortable deploying dollar primary dollars into private equity venture and

growth funds and knowing that along the way there's actually pretty predictable pathways and offramps to get liquidity from. And so you mentioned like why are

from. And so you mentioned like why are these people selling? You know, often the funds that we buy are somewhere between one and two times DPI. So the

investor has already gotten one or two times their money back. Even at a discount, they're getting another turn or a half a turn of their capital. When

you're at a large endowment, you're not trying to get 10x's. you are trying to generate real returns after tax and after inflation to grow the capital

base. They're they're 100 plus year

base. They're they're 100 plus year capital bases. So for them they've got a

capital bases. So for them they've got a phenomenal return from this. It's more

important that they recycle the capital and find new ways to generate that type of return. Yeah, it's interesting. Do

of return. Yeah, it's interesting. Do

you have a sense sort of like one quick question then I'll move back to something else but like do you have a sense of what they're you know so they're selling these what are they doing with the money? like are they are they where are they redeploying it?

Moses I I can't comment on that. Yeah,

I'm just sort of curious. It's like yeah everybody sees it as their every asset manager sees it as their unlock to fundraising is like once people delever from Yeah. What I will comment on and

from Yeah. What I will comment on and this is anecdotal just you know we we talk to LPs both as buyers and as as stewards of capital all the time. What I

will what I will say is there seems to be a a real shift in sentiment away from allocating to these mega platforms because really when you look at the

returns from a lot of the the large platforms they're they're index-like and when you marry the index-like return and the illquidity that you get I'm not

necessarily sure you're getting paid enough for that illquidity anymore.

Where the alpha is is in these smaller funds that are more focused and frankly more nimble and able to be flexible in deal structure, deal sourcing and

pricing is where the real alpha is generating. Now that obviously creates

generating. Now that obviously creates problems for people who allocate billions of dollars a year because it's really hard to do that across a bunch of

different funds. But just anecdotally,

different funds. But just anecdotally, it's it is what we hear from the the LP community. It's interesting. You

community. It's interesting. You

mentioned structure. Do you find like I guess what what have been some of the barriers to getting deals done? Like in

other words, I've heard various things from actually the GP blocking blocking a sale or running closed processes where they only let existing LPs come in.

Sometimes structure is an issue or like it's hard to get visibility on what the waterfall might be or there's a lot of preference on top of it. So price is a little usery. Do you see that stuff or

little usery. Do you see that stuff or is it is it um is it you know more formulaic than that? Listen, every deal because of the industry that we are in, every deal is idiosyncratic. Every

seller is different. Every process is different. Every fund manager is

different. Every fund manager is different. Deals get done and don't get

different. Deals get done and don't get done for a number of reasons. We think

simpler is better all the time. Where we

where we think how we think about downside protection is buying premier quality assets at really really good prices. you know, singledigit to low

prices. you know, singledigit to low double-digit EBIDA multiples for companies growing 50 plus percent and highly highly profitable. The world has to go to a really bad place to

significantly impair capital when you're buying things. It it can of course, but

buying things. It it can of course, but your downside protection from a a MOIC perspective is there. Um, why aren't those companies exiting though? Like if

you're growing 30% and you're profitable, why aren't you why can't you find a buyer? Well, this is a this is a bit of a can of the worms, but you need to it's too umbrella of a statement to

saying why these companies not selling.

You need to segment between what these companies are. So, 7 years ago or 8

companies are. So, 7 years ago or 8 years ago, if you were a software business doing three or $400 million of ARR and still burning cash, there was

appetite for your stock in the public markets. That's no longer the case. So

markets. That's no longer the case. So

the IPO markets are really now only reserved for the musglycaled assets. Assets like Revolute

musglycaled assets. Assets like Revolute assets like data bricks. I would assume a Anderil will get to that place.

They've just gotten so big and there's so much demand for liquidity that private routes of financing just don't really work for them anymore. And

there's a couple of exceptions, right?

Stripe has very publicly said they never want to go public. And we could have a whole discussion on that. We don't need it. Yeah. Right.

it. Yeah. Right.

um th that cohort of companies actually a very small percentage of the assets that we look at where we have generated most of our realized cash returns that

we've returned to investors has been from companies that are in the sub10 billion enterprise world and if you narrow your focus to that part of the

private markets both from strategics and from large cap sponsors like the Toma Braavos or the Silver Lakes of the world where my former employer uh where my

former partner was an early employee at has actually been very active and I I'm by the way I want to be clear I'm sort of talking pre uh tariff wars where I

think everybody's taken a little bit of a step back but really if you look at if you look at that part of the market liquidity's actually been been pretty active and so I think it's really easy

for people to say like why have there been no exits and there's no IPOs and it's just about sort of framing the conversation and that's why we really

love LP stakes is not only do we get to buy incredible companies of which some of the names that we've spoken about that are the really exciting big must assets are in but they also consist of

these super profitable still healthy growing assets that sit in this world that are actually pretty active and pretty liquid and where distributions do come. Yeah, it's interesting. I mean,

come. Yeah, it's interesting. I mean,

like I I've had a line for a while like the IPO markets are wide open. Like if

you're growing and profitable, public markets will take you. They're just, you know, the problem is not the the public markets, it's the companies that people have. And I think, you know, some of

have. And I think, you know, some of that's been borne out lately, which is just like, you know, there's been a run of IPOs and they're all but they're all downruns, which has been my point is like look, if you if you're willing to, you know, a more reasonable valuation,

then then you can find you have a good company, like, you know, you you'll find public market investors for it. But

that's correct. And I think you know uh there was an article that came out and we speak about this in our quarterly letter which I'm happy to uh share with with with with you all and and your

reader base. You know, if you look at

reader base. You know, if you look at how many companies in 2021 raised at over a billion dollar valuation, sort of unicorns, it's something like, don't hold me to the numbers, I don't have

them exactly to hand, but directionally something like 23 or 2400 companies in 2021 raised at over a billion dollar valuation. Since then, six of them have

valuation. Since then, six of them have gone public and only 250ish have gone on to raise at rounds

higher than their previous. So, more

than I would have thought. Yeah. So, so

everybody loves to write about and listen to and look at the unicorn status companies and that cohort of the world has really gotten hit hard and for often

good reasons there. they probably

shouldn't have received that type of funding. It's really just about framing

funding. It's really just about framing the way you look at the private markets and for sure like has liquidity come out of the system have exits and DPI been anemic? Yes, of course. That's why I

anemic? Yes, of course. That's why I have a business and that's why the secondary markets are so important. But

it's about do you find is it is it so I I've heard a few different things like in terms of like what the competitive dynamics and secondaries are and partly that's because like they're almost like you know there sort of you know one

strategy is you know is is is almost like rescue money or no you know rescue money but buying things at a discount.

Another one is just like you know duration mismatch where it's a good asset it just needs a little bit more time um and the first investors want to get out so it's less of a value buy as it is a timing thing. And then there's

of course like you know thing three which is like you know the open AIs and the SpaceX's and the and and the stripes of the world which are actually premium buys. It's just you know they have no

buys. It's just you know they have no reason to go public but to buy in you know it's it's actually a sellers market there. Like do you do you have what what

there. Like do you do you have what what is what is the current dynamic? Is it

you know is it a sellers market? Is it a buyer market? Are people you know do you

buyer market? Are people you know do you get your are you a price maker price taker? Like what what is the dynamic

taker? Like what what is the dynamic right now? Yeah. Um again framing

right now? Yeah. Um again framing framing question. If you are trying to

framing question. If you are trying to buy shares from an early employee or trying to get cap table shares of one of the premium assets that you just spoke

about you are paying massive premiums. If you are buying, if you are indirectly getting exposure to some of those names through LP stakes, you are buying it is a buyer market. And that is one of the

reasons we really like LP stakes is because it is a part of the the private financial market which is very difficult to access. It's difficult because it's

to access. It's difficult because it's really hard to underwrite this stuff and get the information. It's difficult

because as you alluded to before and and said before, you have to get GP approval. So, you need to have that

approval. So, you need to have that network. And thirdly, it's really

network. And thirdly, it's really difficult to get the supply. There's two

to six players, however you want to sort of look at it, that really control the supply in this market. So is a it is both a buyers and a sellers market

because demand for premium assets and just high quality assets always trade at premiums and always trade tighter than I mean that's just it ages time I think

what you said and and and I want to bring up a point you you had mentioned just before which is a mismatch of duration of capital that has been one of the greatest drivers in my opinion of

the secondary market where these funds have just been mismarked marketed. These

funds were never 10 plus 2-year funds.

These were 15 plus 5-year funds. And

why? Because it takes that long to build a really good business, right? Everybody

looks at the Airbnbs of the world and the Facebooks of the world and they're like, "Man, that happened so quickly."

But if you actually look at the history of these companies, they're like 17-year overnight successes. And so, it's just

overnight successes. And so, it's just it's just a mismatch of duration. And

and then taking that that concept one one level deeper. How do endowments and endowment style managers think about deploying capital and and creating a

portfolio? They have actuarial tables

portfolio? They have actuarial tables where they allocate across a number of different asset classes and they have actu actuarial tables around when the

cash flows from each of those assets come. And what has happened is those

come. And what has happened is those actuarial tables shifted to the right.

So what they 101 15 years ago what they thought were going to ultimately be self-funding portfolios which essentially what I mean by that is the

investments from one side enable you to go and reinvest and redeploy don't come you've overcommitted yourself and you are getting fresh capital calls from

investments that you thought were have going to have generated the cash to meet those new capital calls. So you've just had a shift. So duration of capital is is an incredibly important concept to

understand when thinking about the the secondary markets. Yeah, it's

secondary markets. Yeah, it's interesting and it's like in some ways sometimes, you know, the objection, it's not really an objection, but you hear LPs like institutional LPs talk about it. It's like, you know, look, they they

it. It's like, you know, look, they they don't they don't want to exit a position. They just want it to continue,

position. They just want it to continue, you know, they they want to continue compounding their money, right? So they

want as long as there's still runway in appreciation of the asset, they're happy to be in that asset unless for whatever reason they need the cash, but their goal is not to need the cash. It's to,

you know, continuously compound their capital. So it's so it's like so their

capital. So it's so it's like so their view is, you know, what they'll say is like actually look, as long as there's still upside, we don't we don't want anybody to sell. And I guess part of the dynamic is in the past is just I don't know. I guess when company companies

know. I guess when company companies would hit a certain point then they would go hit the public markets and at that point the theory is not that there's no more upside left in the right I mean in that case they could hold on to you know they could get their equity and just keep it in the public markets

they don't have to sell then too but they kind of did anyway so I don't know that was a little bit of a like it's a bit of a ramble it's like it's a weird on the one hand they're saying look as long as there's upside we want to be in it but on the other hand like that's not

historically necessarily what they've done like you know there was a you know part of what's changed obviously is okay sure for some companies they will just stay private longer and it just takes longer to build and and if the appreciation's happening on the private

side then that's where you want to be but some part of it also clearly seems to be um you know right as you said like these are just they're just staying ill liquid for longer. Yeah. And that's not

and you know that's not meeting the liquidity that profile that they modeled for when they when they made their prior commitments and things like that. Yeah.

Yeah. What is I guess a few questions.

So this is going back to you know sort of goes back to the thing that we as like around how did you you know the strategy evolved in 2023 which is pretty early. So so what's the story there and

early. So so what's the story there and the sort of second question is like it's a very obviously it's a very difficult fundraising market for GPS like yourself. So how have how has that been

yourself. So how have how has that been for you and like how are LPs responding to this and like where do you where do you find right because for the same reason that all of these institutionals are overallocated and illquid that must

also be a ch also be a challenge on the fundraising side.

I guess bit of the catch 22 of our business, right? So, what's the story?

business, right? So, what's the story?

How did we get here? I was working at a family office, endowment style family office, very similar honestly in profile, both from a size and and just kind of sophistication perspective of of

the type of people that we buy from.

There was a strategy shift at the family office and they wanted to subcontract out the management of what we called the active passive management, just the endowment style of the business. So I

went around and looked for a bunch of OCIOS outside outsourced chief investment officers and as a carrot to bring fresh capital to one of those platforms. They offered us an

opportunity to what I would now call I said a secondary opportunity to purchase one of their large French insurance company clients was looking to do the opposite of what we were looking to do.

Take capital back into their system to manage it themselves. And that was a many hundred line item portfolio of which consisted of large cap private

equity all the way to emerging manager exposure. And we went around uh to every

exposure. And we went around uh to every you know secondary player to help us price and structure and understand how to diligence this. And it just became

clear that there was a really institutional approach to um you know traditional secondaries and a very non-institutional just price it for 20

cents on the dollar or take it for option value. So that was that was kind

option value. So that was that was kind of my scratch in the the head. I met my business partner. We we've our sort of

business partner. We we've our sort of families serendipitously have actually been in parallel had a mutual friend for many generations grandfather all the way down to to Charles and myself. Charles

came at it from a very different perspective but but but equally sort of insightful and relevant here. So he was on the public side where he was really a

pioneer of block trading in the public market. A large sponsor would take a

market. A large sponsor would take a company public. They'd have a billion

company public. They'd have a billion dollars of shares. It's really hard to get liquidity from a billion dollars of shares owning 40% of a company. just

open up your Merill account and you know put a a limit order for a billion shares, right? And so Charles really was

shares, right? And so Charles really was one of the pioneers of doing bilateral trades with sponsors to help them manage liquidity. So he would buy two three

liquidity. So he would buy two three $400 million blocks directly with the sponsor offmarket. And so there wasn't

sponsor offmarket. And so there wasn't that issue of a seller the the sponsor either needing to take eight years to kind of trickle out of a position or try and dump the stock which frankly would

kill the price. So Charles had you billions and billions of dollars of of reps with every sponsor you can ever imagine and I had been an allocator to

all of those sponsors as well. And from

his perspective in 2021 2022 after the Rivian IPO markets shut down and he started getting phone calls from a lot of these sponsors saying hey we need

help generating liquidity. Can you help us? And these were names that and I'm

us? And these were names that and I'm I'm going to leave the names out of it just but these were names where you you'd put the phone down and you say why are they calling me for help? These are

very sophisticated, very well capitalized, very well known. And so he and I just started a dialogue around really more from an intellectual perspective. And then ultimately as we

perspective. And then ultimately as we did more work together, just decided that it was irresponsible not to start a business to really if if in all honesty

I am more interested from a business perspective around solving problems. And this was just really an issue that frankly the family office that I had come from had gone through and that we

knew a lot of other investors had gone through and other GPS were struggling to create liquidity and and they themselves needed needed avenues to do so. And so

we saw this as an opportunity to do some problem solving in the venture and growth ecosystem. And you know, better

growth ecosystem. And you know, better lucky than smart, right? Because I think we sort of started this business at a point in time where it is getting the

sort of institutional attention that I think it deserves and frankly will prove out to to rightfully deserve. But, you

know, I'd be lying if I said we sat around the table and, you know, hey, we see we see where this is going. It just

we just saw a really big problem and and we went to solve it. And we've been very fortunate. We have a wonderful team

fortunate. We have a wonderful team around us of of institutional quality people and yeah we feel very fortunate to be here and and doing what we're

doing. How has uh like how is

doing. How has uh like how is Sure. Yeah. Um listen fundraising is is

Sure. Yeah. Um listen fundraising is is a difficult period. My business partner Charles says there's always money for good deals and we've been very fortunate

to to find very good deals. So, we've

we've been successful in fundraising and we're still still early in our process.

We we've only really started uh deploying out of fund one. Uh we're at $150 million of capital deployed and and uh the the results and the DPI has been

really strong in the 18 months that we've been around. So, we've been fortunate to have some early success.

Raising is difficult for anybody. being

a first-time fund, there's a lot of, you know, structural hurdles you need to get through, but but we have a lot of institutional clients and partners which which have been really supportive and

we're we're really grateful for that.

So, we continue to find success, but success is not easily come by. Do you

think are you running like the same playbook just longer and harder than the past or has it changed? like are you looking at different are you looking more at family offices or non-institutional or insurance like you know is or is is it just kind of the

same drill just just that much harder I you know I think we so so first and foremost I designed with Charles we designed this business for people who

understand the the frictions that have come between LPS and GPS and liquidity and we designed this business and structured it in such a way that

provides private market access in a much more liquid and less volatile way. So,

we're a 5-year fund. So when we go to people like family offices and institutional allocators that have had the problems of being stuck in funds for

15 years and they see the DPI that we've generated and they see the structure and and how we align ourselves with LPS from a fee perspective, we're wellreceived

and I and I think I think it's just been a differentiated offering frankly. You

know, having been an allocator for 10 10 years professionally, you know, we we we designed it to be as such. So, we

haven't gotten your crazy yet. Yeah. I

was just curious, how has it, I guess, changed or evolved or otherwise differed from your expectations? Either like the deals that you're seeing, the dynamics in the market. I'm sort of curious things always, right? It's not even the

Mike Tyson line, like you know, everybody's got a plan, they get punched in the face. It's like whatever whatever plan you set out with, it always evolves. I'm just sort of curious like

evolves. I'm just sort of curious like where where you see the big um Yeah.

Yeah. No, no question. It's it's a good question. You know, I think I've been

question. You know, I think I've been surprised by how quickly, you know, when I I've been surprised by how quickly

when we came out into market, you know, how quickly people started picking up the phone and calling us. I always sort of thought that it was going to be really, really hard to find deals. It's

not been hard to find deals. Getting

deals done is hard. And I think that you know the the speed at which we've received inbound I think was has been more surprising but getting deals done

is is a tough job and it should be a tough job right good deals should take time and should should be um you know done properly and that's not a swipe of the pen but yeah I think the surprise

has been the the the amount of flow and the amount of opportunity. Um it's

interesting. So, like in other words, you're getting tons and tons of deal flow, but maybe the conversion rate is not necessarily what you thought it would be based on the amount of opportunities there are. Is that what you're saying? My conversion rate's

you're saying? My conversion rate's exactly where I wanted it to be. Our

conversion rate's very low. If my

conversion rate's really high, it means I'm not doing enough work or or or and or we're paying too much. And we are happy to miss because we maintain

discipline on price and structure cuz our job is not to hit 10xes. Our job is to consistently hit a net 2x every 5 years with cash flows along the way and

generate really attractive riskadjusted returns for our investors that look like a compounding private access.

Interesting. Okay. And then I guess just in the last couple minutes is there if you had a magic wand like in terms of where you see gaps to fill in this space either data or service providers or

infrastructure or software like what would it be? I think there's a massive opportunity in the institutionalization of what sits behind

primary allocators in venture and growth and that has many different forms. There's only a very small handful of GPS that are able to access liquidity for continuation vehicles. There's only a

continuation vehicles. There's only a very small handful of GPS that are able to access liquidity solutions for themselves, whether it be a NAV line or

GP commit capital call line. And there

is an amazingly large wide and deep community of really great venture and growth investors that deserve the

attention of liquidity providers. And so

if I could wave a magic wand, I would love to be able to do all of that today.

But we continue to build our business day by day and most importantly person by person. We have a great team around

by person. We have a great team around us. We're very selective and and and we

us. We're very selective and and and we spend a lot of time with the folks that we look to bring onto our platform because we want this to be the last place anyone ever has to work and we

have a long and deep road map to address that magic wand that I just uh that I just spoke about and so we're you know excited to go and do that. So it's

interesting. So it's like in some ways like secondaries is the first move and then and then there are these other capital products that you can layer like whether it's as you say nav lending or you know you know call lines but just at

a you know what would be sub subgman scale. Yeah. Whatever it may be we see

scale. Yeah. Whatever it may be we see new vintage partners as a real platform that will have a number of solutions that are equally as important and

helpful for LPs and GPS. Um, okay. Last

I guess last uh last question. Do you

have do do you find that you have any particularly contrarian takes on on anything on like either AI or AI you know SAS in the world of AI or some other like you know the new

industrialization plays you know lending against GPUs I don't know name name your name your pick. Moses you the joke I make to people because we get we get questions all the time about what do you

think of AI and are you going to be are you going to buy AI? AI for or against?

Yeah, the joke that I kind of make and and it's and it's I say it in Jess, but it's really true. Like we are a backward-looking entity. I am not the

backward-looking entity. I am not the guy to tell you which who's going to win the AI war, but in six, seven years, I'm going to tell you where the winners are and we're going to go buy them for the

best price you can get them in the market. My contrarian view, if you can

market. My contrarian view, if you can call it contrarian, is I think you know if you are not a massively scaled

allocator that has legions of analysts and resources to go and scour the world for every best manager, you need to find a way to get access to the premier

quality private market managers at shorter duration and and less volatile ways. And I think secondaries, whether

ways. And I think secondaries, whether it's us or whether it's some of the other platforms out there, of which there are are some some ones that we think very highly of because otherwise I think you're going to get yourself into

a lot of trouble and look back in 10 years and say, man, we probably shouldn't have done that AI layer company or invested in that fund one seed manager. I think it's just really

seed manager. I think it's just really competitive as an allocator to find to find differentiated alpha in private markets. That's interesting. I think

markets. That's interesting. I think

this is great. I think you're up to something really interesting. And I I kind of agree like I just think the the infrastructure in the secondary market is is is got a lot of runway to build and evolve is just you know given the incentives for companies to stay private

longer. How much has been allocated to

longer. How much has been allocated to privates um and you know how few uh you know how rigid the offramp has been which is just like big acquisition or or IPO and if you know that's clearly clearly there need to be more tools and

more connectivity up and down the and you know up and down the the market. I

would think we agree. Um all right man.

Thank you so much for having me on.

appreciate it. Thank you.