Secondaries
Exclusive: Secondary trading shop Scenic raising $250M first fund to buy pre-IPO stakes
February 15, 2022
Scenic Advisement, which helps startup founders and early-stage venture investors seeking to sell their private stock on the secondary market, is expanding its presence by joining the buy side of the deal flow.
Scenic is raising its first fund, with a target of $250 million, to take ownership stakes in the burgeoning class of venture-backed pre-IPO tech companies, according to people familiar with the firm's plans. The launch is one of the latest twists among trading platforms seeking to capitalize on the maturing market for late-stage secondhand shares.
With the new fund, San Francisco-based Scenic aims to draw upon the firm's market intelligence and experience in serving clients' liquidity needs. Founded in 2013, the firm carved out a role for itself finding institutional buyers on behalf of its clients, who are often startup CEOs and other early employees. Now it plans to become a buyer itself.
The Scenic Private Access fund is expected to have its first close during the second quarter, the people said. Individual investors, including some of the firm's former and existing clients, will be among the limited partners of the fund.
Barrett Cohn, CEO and founder of Scenic, declined to comment on fundraising.
Firms that cater to secondary trading have seen their deal opportunities expand in the market as startups remain privately held for longer periods. More recently, liquidity options through IPOs, direct listings or blank-check buyouts have also dried up, depriving founders and investors of a ready path for cashing out.
As a result, more of them are looking to secondaries for liquidity and they're finding plenty of interested buyers.
This is giving rise to a crop of firms that offer trading platforms, marketplaces and advisory services, with entrants including Nasdaq Private Market, Forge Global and Carta, to name a few.
As institutions allocate more capital for exposure to the venture market, investors have created several new fund vehicles that actively target secondary deals in VC-backed companies—usually late stage and valued at over $1 billion. So-called unicorn companies now number over 560 in the US alone, according to PitchBook data, and their ranks are swelling amid a growing backlog of IPOs even as founders increasingly close VC funding rounds of $100 million or more.
Last year venture firm Founders Circle Capital closed a $355 million fund, and earlier in 2021 asset management titan BlackRock raised over $3 billion dedicated to the strategy.
Typically, these fund managers take aim at secondary deals alongside primary funding rounds. In this highly opaque corner of the already opaque private market, investors have limited data on recent deals, comparable valuations and other information to guide their thinking about prices.
By contrast, the Scenic fund mainly will be buying secondary stakes, and it has the advantage of its own market intelligence derived from its contacts among venture firms, startup CEOs and other senior employees who own early-stage shares in top-tier private tech companies.
In mounting its first-time investment pool, Scenic is effectively making a gambit to buy the asset class it helped create.
Tech companies hire Scenic to be their official matchmaker for CEOs and early investors seeking to unload their stock in companies that are candidates to go public.
Scenic is able to deliver liquidity for its clients in large part because it has amassed a network of global institutional investors that scour the secondary market as a way to build positions in prized, up-and-coming tech companies before they trade on Wall Street.
The Scenic fund expects to focus its share acquisitions on US-based tech companies that expect to go public within two years.
Moving to new positions in the firm to run the fund are Pete Christiansen, Scenic's head of research and a veteran of BlackRock, along with Paul Sacks, who is also a former BlackRock executive.
Featured image by Loop Images/Getty Images
Scenic is raising its first fund, with a target of $250 million, to take ownership stakes in the burgeoning class of venture-backed pre-IPO tech companies, according to people familiar with the firm's plans. The launch is one of the latest twists among trading platforms seeking to capitalize on the maturing market for late-stage secondhand shares.
With the new fund, San Francisco-based Scenic aims to draw upon the firm's market intelligence and experience in serving clients' liquidity needs. Founded in 2013, the firm carved out a role for itself finding institutional buyers on behalf of its clients, who are often startup CEOs and other early employees. Now it plans to become a buyer itself.
The Scenic Private Access fund is expected to have its first close during the second quarter, the people said. Individual investors, including some of the firm's former and existing clients, will be among the limited partners of the fund.
Barrett Cohn, CEO and founder of Scenic, declined to comment on fundraising.
Firms that cater to secondary trading have seen their deal opportunities expand in the market as startups remain privately held for longer periods. More recently, liquidity options through IPOs, direct listings or blank-check buyouts have also dried up, depriving founders and investors of a ready path for cashing out.
As a result, more of them are looking to secondaries for liquidity and they're finding plenty of interested buyers.
This is giving rise to a crop of firms that offer trading platforms, marketplaces and advisory services, with entrants including Nasdaq Private Market, Forge Global and Carta, to name a few.
As institutions allocate more capital for exposure to the venture market, investors have created several new fund vehicles that actively target secondary deals in VC-backed companies—usually late stage and valued at over $1 billion. So-called unicorn companies now number over 560 in the US alone, according to PitchBook data, and their ranks are swelling amid a growing backlog of IPOs even as founders increasingly close VC funding rounds of $100 million or more.
Last year venture firm Founders Circle Capital closed a $355 million fund, and earlier in 2021 asset management titan BlackRock raised over $3 billion dedicated to the strategy.
Typically, these fund managers take aim at secondary deals alongside primary funding rounds. In this highly opaque corner of the already opaque private market, investors have limited data on recent deals, comparable valuations and other information to guide their thinking about prices.
By contrast, the Scenic fund mainly will be buying secondary stakes, and it has the advantage of its own market intelligence derived from its contacts among venture firms, startup CEOs and other senior employees who own early-stage shares in top-tier private tech companies.
In mounting its first-time investment pool, Scenic is effectively making a gambit to buy the asset class it helped create.
Tech companies hire Scenic to be their official matchmaker for CEOs and early investors seeking to unload their stock in companies that are candidates to go public.
Scenic is able to deliver liquidity for its clients in large part because it has amassed a network of global institutional investors that scour the secondary market as a way to build positions in prized, up-and-coming tech companies before they trade on Wall Street.
The Scenic fund expects to focus its share acquisitions on US-based tech companies that expect to go public within two years.
Moving to new positions in the firm to run the fund are Pete Christiansen, Scenic's head of research and a veteran of BlackRock, along with Paul Sacks, who is also a former BlackRock executive.
Featured image by Loop Images/Getty Images
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