Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.One of Silicon Valley\u2019s largest investment firms, Lightspeed Venture Partners, is shifting its focus to the secondary market, in a sign of how the traditional model of venture capital is under threat.Lightspeed is applying to the US Securities and Exchange Commission to become a \u201cregistered investment adviser\u201d, which will allow it to use more than 20 per cent of its funds \u2014 the current cap for venture capital firms \u2014 to trade secondary markets, said two people with knowledge of the matter.Lightspeed, which has about $25bn in assets under management and is run by Ravi Mhatre and Bejul Somaia, made early investments in Snap, Rubrik and Nest. It is among the most active venture capital firms purchasing secondary shares in private companies. It spent $580mn on such deals in the past three years, buying shares in companies including defence tech group Anduril, software company Rippling, and payments platform Stripe.The aftermath of a pandemic-era tech boom led to a historic drought in venture funding, which has hurt a significant engine of the Silicon Valley economy. VC firms are contending with a sharp slowdown in fundraising and exits from their investments through initial public offerings and acquisitions, as well as a collapse in start-up valuations, in part because of high interest rates. Fundraising by US VC firms hit a six-year low in 2023, while the value of investments they made slumped 30 per cent to $170bn, according to PitchBook, even during heavy investments in artificial intelligence start-ups. The number of active venture investors in the US fell 38 per cent in 2023, PitchBook data showed.Michael Romano, Lightspeed\u2019s chief business officer, said: \u201cGiven market dislocation we were able to purchase a lot of very compelling new opportunities at significant discounts of 45 to 50 per cent compared to the last fundraising round.\u201dLightspeed declined to comment on the SEC application.\u201cAbsent an IPO or any M&A, venture capital firms need to get more creative to identify paths to liquidity,\u201d Romano said. \u201cSecondaries are a really important component of that.\u201d The nascent secondary market for VC, in which investors can privately trade existing stakes in start-ups, has exploded in volume in the past 18 months. Secondary trading volume has grown by more than 50 per cent this year to the end of May compared to the same period last year, according to data provider Caplight. It has become a critical release valve for investors in start-ups as it has become increasingly challenging to exit private market investments. As a result, prominent start-ups such as Stripe, OpenAI, SpaceX and Canva have organised secondary transactions allowing employees to sell billions of dollars of their shares. The most traded start-ups in the first quarter of this year were Anthropic, Discord, OpenAI, SpaceX, Epic Games, Databricks and Rippling, according to Caplight.As part of its shift to secondaries, Lightspeed has set up a data platform to monitor secondary markets and find \u201cdiscreet\u201d opportunities to buy private company stock, according to the firm. It hired Goldman Sachs banker Jack Fowler in February to lead the effort.The strategy was partly in response to pressure from Lightspeed\u2019s backers, which include institutions such as pension and endowment funds, to return more capital to investors. Fowler said Lightspeed was being \u201caggressive\u201d in its pursuit of secondaries. \u201cThe VC secondary market is growing dramatically because the need is there,\u201d he said. \u201cThe reality is that the IPO window just isn\u2019t open.\u201dLightspeed has invested 20 per cent of its $2.4bn growth fund in secondary deals. Part of Fowler\u2019s role is to work with the chief financial officers of Lightspeed\u2019s portfolio companies to plan secondary share sales.Lightspeed said: \u201cOur decision to explore the secondary market does not diminish Lightspeed\u2019s commitment to its current investments. We will continue to support our longtime portfolio companies with the same energy and focus we devote to new start-ups.\u201dEarlier this year, Lightspeed launched a private-equity style \u201ccontinuation fund\u201d to sell about $1bn of its stakes in start-ups and free up cash to return to investors. As many as 19 venture capital firms have become RIAs in recent years, including Andreessen Horowitz, General Catalyst and Sequoia Capital, mostly in order to invest in cryptocurrencies and to continue to hold large stakes in portfolio companies after they have gone public. <\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.One of Silicon Valley\u2019s largest investment firms, Lightspeed Venture Partners, is shifting its focus to the secondary market, in a sign of how the traditional model<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-122629","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/122629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=122629"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/122629\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=122629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=122629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=122629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}