Top Tier Capital Partners is approaching the target on its latest venture capital secondaries fund as the market prepares for a wave of dealflow.
The San Francisco-based firm has raised $279.79 million for Top Tier Venture Velocity Fund III from 23 separate investors, according to a filing with the US Securities and Exchange Commission. The target is listed as $300 million.
The fund has been in market since June last year and counts New Hampshire Retirement System and System of Iowa among its limited partners, both of which committed $25 million, according to Secondaries Investor data.
Predecessor Top Tier Venture Velocity Fund II raised $282.6 million, against a target of $250 million, by final close in 2018.
Fund III will target VC secondaries and co-investments, according to meeting minutes prepared by NHRS, dated 9 April. Distressed sales present a particularly attractive opportunity, said Top Tier’s managing director Jessica Archibald.
Appetite for VC stakes was “muted” in the first half, noted investment bank Greenhill in its latest half-year report, as the risk of extended hold periods due to a challenged M&A and initial public offering market, and high cash burn, led to buyers stepping back from the market.
Average pricing for VC fund stakes declined 7 percentage points from the end of last year to 70 percent of net asset value. Pricing held up better among funds focused on “innovative and mature enterprise technology,” the advisor added.
“[In recent years] there were some prices being paid in the private markets that made no sense,” Alan Feld, managing partner of VC-focused Vintage Investment Partners, told Secondaries Investor in March. “We expect that over the next couple of years, valuations will go down considerably and there will be a great buying opportunity.”
Top Tier did not respond to a request for comment.