Venture capital firm Greenspring Associates is planning to hit the fundraising trail in the fourth quarter with its second secondaries fund, according to a presentation from Summit Strategy Group to the City of Jacksonville Police & Fire Pension Fund dated from June.
The size of Greenspring Secondary II has yet to be determined, according to the document available online.
“The fund will invest in venture companies and venture funds on a secondary basis by leveraging Greenspring’s fund of funds platform,” Summit Strategy wrote in the presentation.
Summit Strategies recommended the vehicle to the pension fund as a potential investment as it believes the venture capital secondaries strategy is becoming more attractive.
The environment for venture capital secondaries investing has been challenging in recent years with several groups exiting the market. This has been in part due to the rise of unicorns, which are VC-based private companies with valuations of $1 billion or more.
The exit environment for startups has also been somewhat challenging and has led to an increase in the time to exit. But Summit Strategies explains in its presentation that as the time to exit has lengthened, the inventory of VC-backed companies has also grown significantly.
“Due to the lack of exits and the increased level of inventory, venture capital funds are being forced beyond their anticipated fund lives as they work to liquidate investments,” it wrote. “When investors’ need for liquidity is coupled with excess inventory, it presents an opportunity to purchase valuable assets at attractive prices.”
Greenspring Secondaries Fund I closed in the summer 2014. The fund’s initial target was $100 million, according to a March Securities and Exchange Commission regulatory filing.
Nashville & Davidson County Metropolitan Government Employee Benefit Trust Fund committed $20 million in 2014 to Greenspring’s first secondaries fund. The Baltimore City Council invested $7.5 million in the fund early last year. Maryland’s Howard County Policy and Fire Employees’ Retirement Plan is also an investor in the fund.
As of the end of June, Greenspring’s first fund was 35 percent drawn down, according to minutes from a Howard County’s meeting of the retirement plan committees.
Greenspring, which makes primary and secondaries investments in VC funds as well as direct investments in startups, manages about $3.5 billion in assets and has offices in Owings Mills, Maryland, and in Palo Alto, California.
Greenspring didn’t return requests for comment.