20VC: Will LPs Pull Out of Existing Managers, How Will Fund Sizes Change Moving Forward, Is Now The Time to be Aggressive on Secondaries, What is the Discount on Secondaries Today, Who Will Win and Lose in the Next Five Years with Hunter Somerville, Partn

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 3 March 2023

⏱️ 51 minutes

🔗️ Recording | iTunes | RSS

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Summary

Hunter Somerville is a Partner @ Stepstone, one of the largest secondary buyers, fund investors and players in our ecosystem with over $600BN in capital responsibility and over $100BN AUM. Additionally, Hunter serves on the LP Advisory Boards for Felix Capital, Foundry Group, Imaginary Ventures, Scale Venture Partners, Boldstart Ventures, Ludlow Ventures, and more. Prior to StepStone, Hunter was a general partner with Greenspring Associates, a venture capital and growth equity investment firm that merged with StepStone in 2021. Before that, he worked as an associate for Camden Private Capital.

In Todays Episode with Hunter Somerville We Discuss:

1. Three Types of Secondaries:

What are the three different types of secondaries?
What is the current situation with company secondary opportunities today?
What is the current landscape for fund secondary opportunities today?
What are GP-led restructuring or strip sales? How do they work?

2. LPs Today and Moving Forward Investing in Funds:

Will we see a wave of LPs not commit to their existing managers?
What is the denominator effect and how does that impact LP deployment into funds?
What are the top 3 reasons why LPs will not re-commit to existing managers?
Do LPs feel VCs have fairly marked down their venture books in the last 6 months?
Does Hunter agree that if you have not returned cash to your LPs when you could have done ijn the last 5 years, then you are most in trouble?
Why does Hunter believe we will see more international LPs entering venture than ever before?

3. Liquidity: When Does the Cash Hit:

Why was liquidity so bad in 2022? How did that compare to 2021?
How does Hunter forecast liquidity environments in 2023? What could drive them?
How active were Stepstone in secondary buying over the last few years?
Is now the time to be greedy when others are fearful in secondaries?
What discount was Hunter seeing both on fund and company side secondaries in 20-22?
What is the current level of discount being applied to both company and fund secondaries?

4. AMA with One of the Largest Secondary Buyers:

Which LP class will be hurt the most from the last fund cycle?
What would Hunter most like to change about the world of venture?
What was Hunter's biggest mistake on a company investment?
What are the biggest mistakes LPs make when they do direct investing?
Why are big-name people entering firms as GPs not always a good sign?

Transcript

Click on a timestamp to play from that location

0:00.0	I think everyone should be more cognizant of what fund sizes make sense in the go-forward environment.
0:05.5	I think what you'll see is smaller investment sizes in the managers that they like.
0:10.1	In the ones they really like, they'll just stay the same instead of growing.
0:13.5	I don't think it's like a time to just start pushing money out the door aggressively.
0:17.8	Secondaries, they are on the minds of LPs, they're on the minds of Jeep, they're even on
0:21.5	the minds of employees.
0:22.8	Never before has secondary been such a prominent thought and topic.
0:26.1	And today we debunk secondaries in detail with one of the most renowned players in the
0:30.1	secondaries market.
0:31.2	And so I'm thrilled to welcome Hunter Somerville, partner at Stepstone, a player in our
0:35.1	ecosystem with over $600 billion in capital responsibility and over $100 billion in AUN.
0:41.3	Additionally, Hunter serves on the LP advisory boards for Felix, Foundry, scale venture partners, bold start and more.
0:47.3	And prior to Stepstone, Hunter was a general partner with Greenspring, a venture and growth equity firm that merged with Stepstone in 2021. But before we
0:55.4	dive into the show today, I cannot stand it when I have to ping multiple people on my team to
1:00.0	find information because it's spread across a variety of different tools, documents, spreadsheets.
1:05.8	It slows me down and it prevents effective collaboration with our research team for the shows.
1:10.5	And that's why I love and use Coda. Coda is the doc that brings it all together,
1:14.6	meaning instant collaboration among all of your team with no more blockages.
1:18.6	We use it for 20 VC for every show we do, 10 references with 10 founders of the VC coming on the show.
1:24.6	And then all the data, information, track records are stored in
1:27.8	one searchable place. It just makes my life so much easier and allows me to do my best work
1:32.3	with the right information in real time. So if you're ready to join the efficiency revolution
	...

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