20VC: NEA's Scott Sandell on SPACS and Why Liquidity is One of the Challenges of our Time, Why We Are At An Inflection Point For Secondaries & Why There Is Nothing To Suggest The Boom Will Not Continue
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Liquidity Dynamics
Secondary markets are increasingly pivotal for venture firms seeking liquidity. highlights the challenges and opportunities these markets present, noting that longer holding periods in private markets can yield larger returns. However, the rise of SPACs introduces new liquidity avenues, offering a fresh source of risk capital for private companies 1. He welcomes these developments, acknowledging that while not all will succeed, they provide essential liquidity paths for companies 2.
All new sources of liquidity are welcome. There'll probably be some exuberances, and not all of them will work, but to the extent that they're a path to liquidity for some of our companies, I'm thrilled to see it.
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This evolution is crucial as venture firms navigate the complexities of modern investment landscapes.
Investment Strategies
Investment strategies in venture capital must adapt to unpredictable market conditions. reflects on past economic downturns and stresses the importance of maintaining capital reserves to weather potential busts 3. He emphasizes the need for flexible business plans that can adjust to reduced capital availability during crises. Despite uncertainties, Sandell remains optimistic about the venture asset class, recently investing in Loanpal due to its strong leadership and market position 4.
I think what gave us the confidence is that they just have an extraordinary leadership team.
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This approach underscores the balance between caution and opportunity in venture investing.