My new life in London and new role in GrantTree offers me a unique opportunity to immerse myself in the startup scene of the city, for which I am incredibly grateful. One of the recent occasions to learn more about different funding opportunities and interesting people was a Friday morning chat with Nick Habgood, co-founder of Azini Capital. Their profile is direct secondary transactions, which is an area that was completely new to me and he was kind enough to share their journey and experience on the field.
Holding shares in a sexy startup sounds like an exciting idea and it’s potentially a very lucrative investment. However, sometimes the exit can’t come fast enough – the company might be doing great but just not yet ready to be sold or IPO. Maybe (if you’re a VC) your fund was set up for 10 years but the company needs at least a couple more to succeed, and you would like free up some cash. Maybe you’re a founder who’s left after years of building your business, and now you need cash for a new venture instead of some highly illiquid shares.
Nick Habgood, one of the founders of Azini Capital, described these scenarios while chatting about how exactly direct secondary transactions work, and who might profit from their services. “A direct secondary transaction is the acquisition of shares or other securities (for example shareholder loans) in a private or small cap public company from historical investors and shareholders. This type of transaction is also described as replacement capital.” Their typical client would be as described above, venture capital funds looking to unwind some investments, but also hedge funds and, on rarer occasions, the founders of businesses looking for liquidity.
Read the rest of the interview on the GrantTree blog.