Hunter Somerville: Biggest Mistake LPs Make; Deep Dive into Secondary Markets | 20VC #985
11Hunter Somerville is a Partner @ Stepstone, one of the largest secondary buyers, fund investors and players in our ecosystem with over $600BN in capital responsibility and over $100BN AUM. Additionally, Hunter serves on the LP Advisory Boards for Felix Capital, Foundry Group, Imaginary Ventures, Scale Venture Partners, Boldstart Ventures, Ludlow Ventures, and more. Prior to StepStone, Hunter was a general partner with Greenspring Associates, a venture capital and growth equity investment firm that merged with StepStone in 2021. Before that, he worked as an associate for Camden Private Capital.
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0:00 - Intro
0:25 - What are the three different types of secondaries?
2:20 - What is the denominator effect?
5:43 - What Are Endowments Doing?
9:01 - Which GPa are first on the chopping block?
13:58 - What are GP-led restructuring or strip sales?
22:57 - How much of a discount are Secondaries selling for?
30:13 - Biggest Mistakes LPs Make with Direct Investing
34:00 - International LP Money
42:16 - Quick Fire Round
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In Todays Episode with Hunter Somerville We Discuss:
1. Three Types of Secondaries:
What are the three different types of secondaries?
What is the current situation with company secondary opportunities today?
What is the current landscape for fund secondary opportunities today?
What are GP-led restructuring or strip sales? How do they work?
2. LPs Today and Moving Forward Investing in Funds:
Will we see a wave of LPs not commit to their existing managers?
What is the denominator effect and how does that impact LP deployment into funds?
What are the top 3 reasons why LPs will not re-commit to existing managers?
Do LPs feel VCs have fairly marked down their venture books in the last 6 months?
Does Hunter agree that if you have not returned cash to your LPs when you could have done ijn the last 5 years, then you are most in trouble?
Why does Hunter believe we will see more
international LPs entering venture than ever before?
3. Liquidity: When Does the Cash Hit:
Why was liquidity so bad in 2022? How did that compare to 2021?
How does Hunter forecast liquidity environments in 2023? What could drive them?
How active were Stepstone in secondary buying over the last few years?
Is now the time to be greedy when others are fearful in secondaries?
What discount was Hunter seeing both on fund and company side secondaries in 20-22?
What is the current level of discount being applied to both company and fund secondaries?
4. AMA with One of the Largest Secondary Buyers:
Which LP class will be hurt the most from the last fund cycle?
What would Hunter most like to change about the world of venture?
What was Hunter’s biggest mistake on a company investment?
What are the biggest mistakes LPs make when they do direct investing?
Why are big-name people entering firms as GPs not always a good sign?
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