Secondary investment fund SecondQuarter Ventures has raised $83 million as the first close of its second fund, just 18 months after launching its first $51 million fund.
With that seed money already deployed, existing lenders have doubled in over $50 million for fund two. Another $30 million will come from new investors, including A Cloud Guru founder Sam Kroonenburg, Andrew Forrest’s Minderoo Foundation, Craig Burton’s Verona Capital, 99designs & Flippa co-founder Mark Harbottle, Up Bank co-founder Dom Pym, Ignition co-founder founder Guy Pearson and ActivePipe co-founder Ash Farrugia.
SecondQuarter Ventures provides liquidity to equity investors, employees and founders in larger, privately held scale-up companies. It plans to close its 2nd fund by the end of 2022 with over $100 million in the bank, and ramp up its offering to VC fund investors in need of liquidity.
Kroonenburg enjoyed its own spectacular liquidity moment last year, when he and brother Ryan landed one of the biggest mergers and acquisitions of 2021 with a $2 billion sale to Pluralsight. Sam then joined SecondQuarter as a venture partner in May of this year, saying that with A Cloud Guru, he wanted to give back to the industry that helped him succeed.
SecondQuarter Ventures provides liquidity to investors, employees and founders who own shares in high-growth startups.
The first $51 million fund made 17 investments in just over a year. They include unicorns GO1, Canva, and SafetyCulture, as well as Bare, Shippit, Edrolo, Athena Home Loans, Buildxact, UpGuard, and Assignar. There is also a return with American company Moxiwork acquiring ActivePipe in early 2022.
The new second fund already has positions in Athena, Shippit, Sonder and Zipline.
SecondQuarter managing partner Ian Beatty said the new fund will continue to invest in mature venture capital funds and directly in top Australian and New Zealand tech companies valued at more than $75 million.
“SecondQuarter’s first fund created the secondary category in Australian companies,” he said.
“Now Fund 2 enables us to build on this traction in a market that has fueled unprecedented demand for our product.”
‘Human’ reasons to sell
Beatty said the liquidity needs of venture capital fund investors are often a simple, “human” reason.
“In one instance, the seller said he just wanted to cash in on the position early so that he could use it to build homes with his sons for the next five years. We were happy to help,” he said.
For Zipline.io founder Michael Momsen, it was one of those moments to be able to build a roof over his family.
“As a founder, it’s almost impossible to get a mortgage…so I had to get loans from my family to finish the house we were building — it was very stressful,” he said.
“Secondaries allowed me to pay back family members and have financial security at home – freeing up some ‘latent CPU power’ so I can make bigger swings when growing Zipline.”
Sonder co-founder Craig Cowdrey said SecondQuarter adds another line of excellent strategic advisors to our team, while also providing a liquidity path for employees to realize the value of their stock options.
“Providing this opportunity over time is an important part of aligning and rewarding the people who are at the core of our business,” he said.
SecondQuarter chairman Leigh Jasper said they have been buying positions from investors in Australian venture capital funds in recent years.
“This has given us indirect exposure to a basket of great companies, including Canva, Safety Culture and Culture Amp,” he said.
“This liquidity product for venture capital investors is now a core part of the fund and we expect to do much more in this area.”