New Enterprise Associates (NEA) is returning to the secondary market.
The Silicon Valley-based venture capital firm has raised more than $468 million for its NEA Secondary Opportunities Fund, according to an SEC filing. The fundraising closed on July 3 but has not attracted much attention, according to sources familiar with the matter. The fund raised capital from more than 60 limited partners, including the San Francisco Employees Retirement System, which contributed $20 million to the fund, according to conference documents.
The NEA did not respond to a request for comment.
This is not NEA's first foray into the secondary market, an asset class in which funds buy existing shares in companies or other funds. The firm operated a secondary market before spinning off its secondary business in 2018, but because it was not a registered investment adviser, it could only hold 20% of its assets in the secondary market. The separated company became NewView Capital, and is still led by Ravi Viswanathan, who was an investor in NEA for nearly 15 years before founding NewView.
NEA plans to become a registered investment adviser in 2023 and potentially re-enter the secondary market with an in-house fund, sources familiar with the matter told TechCrunch.
It's a good time to set aside some cash to invest in the secondary market: The latest data from Caplight, a secondary data tracking platform, suggests that more than $706 million will be invested in direct secondary transactions (i.e. transactions involving a company's shares) in the first half of 2024, helping to push this year's volume past last year's total of $1.1 billion.
Some of these deals are being done the traditional way, with investors buying the previous owners' shares with the company's consent. Other investors are setting up special purpose vehicles (SPVs), or companies set up to back specific assets, to access secondary trading in popular companies. In more rare cases, some investors are even buying other companies' SPVs to make a profit.
NEA isn't the only firm currently launching a fund dedicated to buying secondaries shares. A few months ago, StepStone raised $3.3 billion for the largest dedicated venture secondaries fund in history. Earlier this week, G Squared raised $1.1 billion for a later-stage fund that plans to allocate most of the capital to secondaries deals. Last fall, Industry Ventures raised $1.45 billion for the strategy.