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The Benefits of Portfolio Products & Venture Capital Funds

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August 4th, 2020


Themes, Learning


Andreas Bezner

How To Leverage These Unique Opportunities To Grow Your ROI

When it comes to the world of investing, there are a wide variety of ways to go about maximizing your return. Here at Stableton, we offer our members opportunities across an expansive range of investment styles and approaches. But today, we’re going to talk about a unique type of opportunity that revolves around portfolio products in the form of a venture capital funds – and in particular, a secondary in a leading Swiss venture capital fund

What Is A Venture Capital Fund?

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. Essentially, investors who invest in venture capital are seeking for a high-risk/return factor

Now, you might be thinking, if I like a potential startup, why not just invest directly with the company? Why should I go through a venture capital fund? There are several reasons why it makes sense to invest via a VC fund – some more obvious than others.

The Advantages of Entering a Venture Capital Fund via Secondary

Entering through a VC fund via secondary presents investors with many benefits that range from high expertise of the general partner and its network to a diversification effect. Furthermore, doing an investment via a secondary transaction often includes investing in an existing portfolio. This means most capital calls have already been made, which means that the invested capital is working and not just sitting on the sideline. It is important to know that an IRR overlooks capital which is not invested. This means that two funds with the same IRR have different returns depending on much capital has been called.

Together, these benefits present you with a fine opportunity to get in early on a wide variety of emerging startups and entrepreneurial endeavors and secure high returns through an aggregate venture capital fund with a discount.

Entering With a Discount

It is difficult to ignore the effects that the COVID-19 pandemic has had on the world, including the investment world. With that said, there are several investors who are looking to rebalance their portfolio or must liquidate due to margin calls in their portfolio. Amongst other reasons, this is one of the events which could trigger primary venture capital investors to sell their stake in a secondary round with a significant discount.

Interested in learning more? Stay tuned for our next article, which will include important details relating to a new opportunity that we would like to share with you. If you can’t wait, sign up today and find out which leading Swiss venture capital fund we have in our pipeline.

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