Flashpoint holds $70m first close for new venture secondaries fund

The GP is targeting $200m for its new strategy and plans to hold a second close before a final close. The co-founders, Michael Szalontay and Alexander Konoplyasty, will commit for 10-15% of the fund with their own capital.

The GP, which started out as a VC fund manager, launched its secondaries and debt strategies last year alongside its third VC fund. Co-founder Alexander Konoplyasty told Unquote that the GP had been thinking about launching a separate secondaries fund for quite some time. "We have seen very few buyers for LPs who would like to exit their stakes. Being an investor in one company for seven years is a long time and Covid-19 has pushed this duration by another three years; it's just too long for some investors. So when Covid happened, we actually thought it was a good idea to go out and launch this fund."

The GP started raising the fund in April 2020 and said that all fundraising was carried out remotely. Konoplyasty said that attracting institutional investors to the fund had been complicated by the pandemic. "Forming new relations has been particularly challenging, because people are still very cautious," he said. 

But, Szalontay said, "the fact that our VC funds have performed so well is the reason why we were able to raise funds from existing investors so easily".

The GP did not appoint advisers for the fundraise, but plans to appoint a placement agent for the second close to attract institutional investors. 

The secondary fund is jointly led by Michael Szalontay and managing partner Chris Baxter, who joined Flashpoint in 2020.

Investors
The secondaries fund is anchored by the Scheinberg family office, the founders and former owners of Pokerstars. Other investors include entrepreneurs and family offices, most of which were existing LPs from its other funds, and come from Europe, Israel and North America. Konoplyasty said: "By the second close, we're definitely looking to raise funds from a number of institutional investors."

Investment strategy
The secondaries vehicle will provide liquidity to early-stage investors and existing or former employees, including the founders. It will focus on late-stage technology companies with proven business models based in CEE, Israel, the Baltic countries, Finland, and the CIS. It will look at companies operating in niches within the sector but the primary focus will be on software businesses.

The GP's initial investment upon entry will range between $5m and $15m and could potentially increase to more than $30m over the life of the investment. 

Flashpoint was established in 2012, and since then has made investments in 29 tech businesses, with 66 follow-ons, exiting eight companies. Apart from the secondaries vehicle, the GP manages three venture funds and a new debt fund, also launched last year. 

People
Flashpoint – Michael Szalontay (general partner, co-founder); Alexander Konoplyasty (general partner, co-founder); Chris Baxter (managing partner). 

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