Venture capital group G Squared has reportedly raised $1.1 billion for its latest fund.
The firm aims to tap into increasing investor demand for G Squared’s strategy of buying pre-existing stakes in start-ups, the Financial Times (FT) reported Monday (Aug. 26).
As that report noted, while most venture capitalists (VCs) are interested in acquiring new shares in startup companies, G Squared invests the bulk of its funds in existing shares, purchased directly from start-up employees and investors who want to sell some of their holdings.
This secondary market, the report said, has been flourishing amid a downturn in public listings and takeovers that would typically let shareholders sell their stakes.
The FT said this new fund is G Square’s sixth and similar in size to its last one. Founder and managing partner Larry Aschebrook told the newspaper the firm will now have about $4 billion of assets under management.
He added that many fund managers faced pressure from institutional investors to return cash, but were finding it difficult thanks to a slowing initial public offering (IPO) environment.
“For years, companies and traditional growth managers viewed secondaries as something that was bad,” Aschebrooke told the Financial Times. “Thankfully, finally it’s our time to shine.”
This month brought the news that startup failures in the U.S. had surged by 60% in the last year, presenting a threat to millions of jobs and potentially affecting the larger economy.
Data from Carta, a provider of services to private companies, shows that 254 venture-backed clients went bankrupt in the opening quarter of 2024, a rate more than seven times greater than in 2019. Among the high-profile casualties were Tally, a financial technology company valued at $855 million, and desk rental company WeWork, which had raised $16 billion in debt and equity.
“The rise in startup shutdowns comes as funding for early-stage AI startups slows, leading to concerns of a tech bubble burst,” PYMNTS wrote. “The European Business Review argues that the coming wave of AI startup failures is a natural part of the technology’s evolution, clearing the way for innovation and paving the road to broad adoption.”
That report suggested that the healthiest AI firms, those which have identified specific problems and built practical solutions, will continue to flourish. In addition, the report said, the failures create opportunities for other companies to attract talent and innovative technology.
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