NEA Discreetly Makes a Comeback to the Secondary Markets

New Enterprise Associates (NEA) has re-entered the secondary market sector.

Based in Silicon Valley, venture capital firm NEA has successfully gathered over $468 million for its NEA Secondary Opportunity Fund, as per a recent SEC submission. This fundraising effort, which concluded on July 3, has involved contributions from upwards of 60 limited partners, including a significant $20 million from the San Francisco Employees’ Retirement System, revealed in documented reports.

Attempts to obtain comments from NEA were not met with a response.

NEA’s venture back into the secondaries marketplace marks a return, as it previously engaged in this sector before offloading its secondaries operations in 2018 due to regulatory constraints as a non-registered investment advisor. This limitation restricted secondary market asset holdings to less than 20% of its portfolio. The branch out developed into NewView Capital, under the leadership of Ravi Viswanathan, a long-standing NEA investor. Viswanathan had nearly 15 years at NEA before taking the reins at NewView.

In 2023, after becoming a registered investment advisor, NEA was positioned to re-involve itself directly in the secondaries market, according to a source in the know shared with TechCrunch.

The current climate is ripe for investment in secondaries, with data from the Caplight platform indicating over $706 million funneled into direct secondaries transactions in the initial half of 2024. This outlay is on course to eclipse the $1.1 billion tallied in the previous year’s transactions.

These transactions are diversely executed, ranging from traditional methods—whereby investors acquire shares from previous owners with the company’s approval—to the establishment of special purpose vehicles (SPVs) aimed at singular assets. Some investors opt for a unique angle by investing in other firms’ SPVs, thereby securing a stake in highly sought-after companies.

NEA is amongst several entities currently assembling funds focused on the acquisition of secondary shares. Not too long ago, StepStone launched a record-breaking $3.3 billion venture secondaries fund, while G Squared recently closed a $1.1 billion late-stage fund intending to invest primarily in secondary deals. Similarly, last autumn saw Industry Ventures amassing $1.45 billion for this investment strategy.