Liquid Stock returns with second fund

The liquidity provider closed its debut fund in 2019, with support from Coller Capital, Goldman Sachs Asset Management and Morgan Stanley AIP.

Liquid Stock, a liquidity provider backed by some of the biggest names in secondaries, is in the market with its second fund.

The firm, which is headquartered in San Francisco and Los Angeles, is targeting $250 million for Liquid Stock II, according to a filing with the Securities and Exchange Commission. Sixpoint Partners is listed as a placement agent.

Debut fund Liquid Stock I raised $161 million by its close in December 2019, with Coller CapitalGoldman Sachs Asset Management and Morgan Stanley Alternative Investment Partners investing $150 million, Secondaries Investor reported.

Liquid Stock extends financing to employees and shareholders in late-stage, VC-backed companies so they can monetise their shares without having to sell them. It does this through workplace plans implemented through separately managed accounts, rather than by targeting individual employees.

Most of its transactions are “structured like a loan, secured by the shares; but, if the shares go to zero, the employee can walk away”, said founding partner Robert Pitti last year.

The early days of the pandemic saw a spike in demand for such products, as companies that were due to hold a liquidity event were forced to delay, and in some cases make redundancies, Secondaries Investor noted.

Options must typically be exercised within 90 days of an employee leaving a company. Selling them outright can be expensive as they are subject to capital gains tax, which can work out at 50 percent or higher in California.

The firm would not comment on fundraising.