(Bloomberg) — Pinegrove Opportunity Partners has raised $2.2 billion for its debut fund, closing a large investment round in a fast-growing niche of the venture capital market.
The San Francisco-based firm is what’s known as a venture secondary. It buys existing ownership stakes in other venture-backed companies or funds rather than leading primary rounds that may fund a company’s future growth. The venture secondaries market has been growing and attracting interest as the traditional venture capital model has struggled to find liquidity, since startup founders increasingly have opted not to sell their businesses or take them public.
“There is a long-term structural shift happening in companies that are staying private longer,” Managing Partner and Chief Investment Officer Brian Laibow said. “This illiquidity challenge has rippled across the industry to everyone [from] companies to GPs and LPs.”
Founded in 2023, Pinegrove Opportunity Partners has significant backing from Brookfield Asset Management and Sequoia Heritage, which put $500 million into the first fund, the company said. Other limited partners include the Florida State Board of Administration, according to a person with knowledge of the matter who asked not to be named discussing private information.
The 16-person team at Pinegrove is led by Laibow, the former managing director of Oaktree Capital Management’s Global Opportunities Fund; Prateek Bhide, a general partner who used to work at D1 Capital Partners; and Gaurav Mathur, a general partner who was a former head of US equity private markets at Goldman Sachs Group Inc.
Pinegrove plans to deploy a vast majority of its capital directly into mid- to later-stage private technology companies that are nearing profitability by providing flexible liquidity and financing options to founders, venture teams and their investors. The remaining capital will be put into funds or other investment vehicles. The firm’s average check size will be between $50 million to $250 million.
Pinegrove has already deployed $1 billion in its debut fund, including through secondary investments in payments provider Stripe, software firm Databricks Inc., and fintech Revolut Ltd.
Pinegrove gets access to companies through a variety of ways, including buying secondary shares from an existing investor in a startup, or through buying out a limited partner’s stake in a fund that has exposure to a coveted company. The firm also invests in tender offers, transactions that allow startup staff to sell shares to investors and that are growing in popularity.
The venture secondaries market has been booming alongside a similar move in private markets generally. BlackRock Inc. is readying its own such fund and Goldman Sachs Group Inc. just completed its acquisition of Industry Ventures, which owns a venture secondaries arm.
As some venture firms raise increasingly bigger war chests, like Andreessen Horowitz’s recent $15 billion funding haul, Pinegrove’s new fund is focusing on secondary shares that can come at a discount or come with access to mature, high-demand startups.
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