Investing and exiting late-stage primary and secondary VC deals

We recently hosted a webinar focused on late-stage venture investing and the importance of secondary market deals. The session explored how investors and startup founders can navigate the challenges of today’s market and still find strong returns, even when IPOs and M&A exits are limited.

Our host, Ronald Rapberger, Head of DACH at SeedBlink, was joined by J. Skyler Fernandes, Managing Partner at VU Venture Partners. With over 170 startup investments and a global VC portfolio, Sky brought a wealth of experience and practical insights to the conversation.

Skyler is the Founder and Managing Partner of Vu Venture Partners, a global early and growth-stage VC fund. He leads the broader Vu platform, which also includes a real estate private equity fund and Venture University, an investor accelerator that has trained over 750 people in venture capital, angel investing, and private equity. 

Here’s what we covered during the session:

• Why secondary deals are gaining popularity: With fewer IPOs and acquisitions, secondaries offer a valuable exit route for early investors and a way for new investors to access high-growth companies.
• The role of SPVs: SPVs are making it easier and more affordable for investors to participate in private deals and build diversified portfolios with lower entry points.
  How to evaluate late-stage investment opportunities: Skyler shared his framework for assessing deals, including market size, timing, team quality, potential for mass adoption, and magnitude of innovation.
• Trends shaping the next decade: From AI and deep tech to space real estate and biotech, Sky explained why the next wave of massive opportunities will be in areas that combine digital and physical innovation, what he calls “from bits to atoms.”

The webinar also highlighted how smaller investors can now gain access to premium deals that were previously reserved for large funds, thanks to syndicates and evolving investment structures.

Why secondaries matter more than ever

In the current venture capital landscape, the number of IPOs and M&A exits has declined significantly over the last few years. The change has made secondary transactions a more attractive option for investors seeking liquidity. 

‍Secondaries enable existing shareholders, such as early employees, angel investors, or venture capital funds, to sell their equity stakes before a public exit, offering a means to realize returns without waiting for an IPO or acquisition.

‍Skyler: “I think if you have the mindset that you’re just going to hold all the way until the company goes public or gets acquired, you’ll probably lose out on what your final total return could have been.”

Chimeras vs. Unicorns – A New Investment Era

Many high-growth startups are now staying private longer, often raising large funding rounds that resemble public offerings in size. These "private IPOs" enable companies to bring in substantial capital from institutional investors while remaining private.

Companies like SpaceX and Figure illustrate this change. Both have attracted massive private investments while remaining outside the public markets. For instance, Figure grew from a $2.5B valuation to $40B in just one year, backed by major players such as Amazon and OpenAI. These companies exemplify how chimeras can achieve scale and market dominance while still private, making them attractive targets for late-stage investors.

‍Skyler: “We’re kind of entering into this new era, what we call the chimeras versus the unicorns. The idea that companies, which are now public and undoubtedly worth over a trillion dollars, with about seven or eight of those now, are now seeing some private companies start to reach these significant valuations. ‍I think there’s a lot of incentive to stay private longer. By the time some of these private companies do go public, they’ll go public at probably a trillion-dollar-plus valuation.”

Skyler shared his framework for evaluating strong late-stage investment opportunities, where one of the most important factors is targeting massive, actionable market opportunities. In these industries, the potential for long-term growth is substantial and measurable. Investors should also prioritize companies offering transformative solutions, aiming for at least a 10x improvement over current alternatives rather than incremental enhancements.

Skyler: “As a venture fund, we've been focusing primarily on doing the later-stage deals where there are still significant return profiles. ‍We'll selectively still do ones where the return multiple might be less than a 10x, but the ones that we're adding from a fund perspective, versus what we're doing on the SPV side, when our committed fund is investing, we're still very much focused on returning 25% to 100% for every investment.”

Another key consideration is whether you see potential for a company to achieve mass-market adoption. It requires products and services that are scalable and can reach a broad consumer or enterprise market. In our conversation, Skyler mentioned the importance of running a thorough evaluation of a startup to determine if it has the necessary channels, partnerships, and customer base to support large-scale growth.

Additionally, having reputable and well-capitalized co-investors is a strong signal of credibility and future fundraising potential. At the end of the day, late-stage investors tend to pay close attention to both entry valuations and exit strategies. Even though valuations are usually higher at this stage, the potential return still has to make the risk worth it.

Skyler: “If you look at our early investment in Figure, we entered Figure at a $2.5B valuation last year. At that point, the company was pre-revenue and pre-product. ‍Some might say, well, that’s a high valuation for a pre-revenue, pre-product company entering at $2.5B. What we also teach at Venture University is that it’s the return multiple of what could happen in the future that matters, not just the entry valuation.”

The rise and growing importance of SPVs

With the rise of SPVs and investment syndicates, access to late-stage, high-growth companies is expanding beyond institutional VC circles. Those who understand how to navigate these channels can tap into deals with real traction and momentum, those found in early-stage bets, but with less guesswork and more data to back the decision.

As Sky Fernandes explained, the cost and complexity of setting up SPVs have decreased significantly, allowing for faster formation and broader participation. This has opened the door for smaller investors to join high-profile deals that were previously limited to institutional funds and large venture firms.

SPVs are often used to pool capital from individual investors into a single investment entity, enabling access to late-stage or secondary opportunities that would otherwise be out of reach. Syndicates and angel networks can now create SPVs to invest in high-demand companies, even with relatively small individual check sizes. This structure offers both administrative efficiency and legal simplicity, while providing exposure to competitive, high-growth assets.

Skyler: “You’re going to have to make the call on how much more juice is left in the companies you’re investing in. I think working with a professional manager who is paying attention to this stuff, and not just waiting until you find out the company went public, is a good idea. Anything above the money you put in is a positive return. So overall, you’re not missing anything as long as you’re making money on the exit side. Could you have made a 20x instead of a 10x? For sure. But you can also redeploy that capital into new opportunities.”

Secondary shares - when to buy - when to sell 

Not every secondary deal is worth pursuing, and it’s important to evaluate whether the potential return justifies the associated risks. It involves assessing the company’s growth trajectory, current valuation, and the likelihood of achieving liquidity within a reasonable timeframe. Skyler advises investors to avoid overhyped companies with high valuations, as future returns may not align with the price paid. Instead, investors should prioritize deals where the business fundamentals support long-term value creation. Another operational element is the due diligence process, where Skyler advises investors always to confirm the legitimacy of the shares being offered, understand the full chain of custody, and be aware of all associated fees, including one-time transaction fees, management fees, or carried interest. Working with a trusted investment partner or platform will help you understand these complexities and ensure transparency throughout the secondary investment process.

‍Skyler: “I think human civilization right now is entering a pretty interesting next decade to two decades. We’re kind of transitioning from what I call the excitement around the purely 'bits' world into the world of 'atoms.” I think some of the most exciting things we’re investing in are about optimizing and driving capital efficiency in atoms versus bits, and also the merger of the two.

‍Look at where the most massive market opportunities are today. You’ll see that the initial era of unicorns, and what we now call “chimeras,” or trillion-dollar-plus companies, started off being more digitally oriented. Now, this next generation of companies is much more focused on the atom side, or a combination of both.”

Explore further 

In our recent webinar, we focused on how SPVs help investors participate in late-stage deals by simplifying the process, reducing costs, and allowing smaller check sizes, which opens up high-quality deals to a broader audience.

We also discussed how SPVs support a more efficient and organized investment structure. Instead of having multiple investors on a company’s cap table, SPVs consolidate them into a single entity. This approach makes it easier for companies to manage future funding rounds and for investors to gain exposure without the legal and administrative complexity. It also enhances transparency and streamlines compliance and reporting, particularly in markets where regulatory systems are still evolving.

To hear more real-world examples, including investments in companies like Figure and SpaceX, and learn practical tips for evaluating secondary deals and using SPVs effectively, we invite you to watch the full webinar recording.

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