The secondary market for VC limited partner stakes is frozen for now - Business Insider

With the secondary market for limited partnership stakes frozen, venture-capital investors could walk away from certain funds.When a venture capital firm raises a new fund, the money committed by outside investors might seem to be set in stone for a period as long as 10 years.

The trading freeze will eventually lift, but when it does, experts predict that stakes in venture funds will sell at steeply discounted rates. That hurts not only the seller, but also the venture capital firm. That could be a big problem for venture capital firms, because the secondary market acts as a kind of backup plan for the industry, especially in times of stress. Venture funds, which allow them to get cash on demand from investors who have already committed it.

It's an open question, though, whether that will be soon enough to prevent a really unfavorable outcome for venture capital firms. Their limited partners who fail to find a buyer for their VC fund stakes may simply default on capital calls. That could leave a hole in some venture funds, and undermine their plans to support existing portfolio companies while investing in new ones.

Typically, the limited partners who are looking to rebalance their portfolios will sell collections of partnership stakes in multiple funds all at once. Instead of defaulting on their obligations, those short-on-cash investors will often look to sell their partnership interests instead. Many such sales involve a single limited partner — often an affluent individual investor, rather than an institutional investor. Those individuals frequently sell a stake in a single fund, or in a handful of funds.

In such cases, "there's a strategic reason for them to buy as opposed to a pure financial reason," he said.

Lol....Trevor = chaos😂

The reason GTA is used as a picture is because the most profitable form of venture capital funds is video games (I think).

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