Passion Capital closes venture secondaries deal

Ely Place Partners was financial adviser on the transaction and Osborne Clarke was legal adviser.

The early-stage venture capital fund's first vehicle closed on £37.5m in 2011. British Business Bank was a cornerstone investor, committing £25m with an additional £12.5m coming from a further 18 LPs.

Passion Capital made 41 investments from the first fund and since the fund was entering its 10th year with only 15 exits to date, the manager launched a tender process in order to give existing LPs a liquidity option, the source said. As of Q4 2020, the fund's NAV was in excess of £100m, the source added. 

The sale of some LP stakes to Wilshire-managed funds will not alter the existing fund structure and underlying assets, and there will be no transfer of assets into a continuation vehicle, the source said.

Passion typically makes investments of £300,000-700,000 in seed-stage VC opportunities.

To date, the manager has backed 81 early-stage startups over its three funds, including GoCardless and Monzo.

As companies stay private for longer, venture secondaries could see an increase in popularity, as recently explored by Unquote. Contrary to buying on the primary market, where investors are investing in a blind pool, acquiring on the secondary market means buying into a known portfolio of assets. Furthermore, much of the venture risk has been taken out with good visibility on value drivers, potentially making the deal more of a growth portfolio than a venture one.

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