NEA Quietly Reenters Secondaries Market

New Enterprise Associates (NEA) is reentering the secondary market

According to an SEC filing, the Silicon Valley-based VC raised over $468 million for the NEA Secondary Opportunity Fund. According to a source knowledgeable about the situation, the fundraising campaign concluded on July 3 but has not garnered significant attention.

According to meeting documents, the fund raised capital from over 60 limited partners, including the San Francisco Employees’ Retirement System, which committed $20 million to the fund.

The National Endowment for the Arts (NEA) did not respond to a comment request.

This is not NEA’s initial venture into the secondary market, an asset class that entails the acquisition of existing interests in a company or another fund. The firm was previously a secondary participant but subsequently disposed of its secondary practice in 2018 due to its lack of registration as an investment advisor.

This restriction prohibited the firm from holding over 20% of its assets on the secondary market. That spinout evolved into NewView Capital, managed by Ravi Viswanathan, an NEA investor for nearly 15 years before establishing NewView.

A source familiar with the matter informed TechCrunch that NEA became a registered investment advisor in 2023. Consequently, NEA could reenter the secondary market with an in-house fund.

It is an advantageous moment to accumulate capital to invest in the secondary market. In the first half of 2024, over $706 million was invested in direct secondary deals involving a company stake, according to recent data from the secondary data monitoring platform Caplight. This year is on course to surpass the total trading volume of $1.1 billion in the previous year.

Some of these transactions are conducted conventionally, with investors purchasing shares from previous proprietors with the company’s approval.

To obtain access to secondary transactions of hot companies, other investors are establishing special purpose vehicles (SPVs), vehicles raised to support a specific asset. In uncommon instances, investors even invest in the SPVs of other companies to gain a share of the action.

NEA is not the sole organization raising funds to purchase secondary shares. StepStone raised $3.3 billion a few months ago for the all-time largest dedicated venture secondaries fund. G Squared recently raised $1.1 billion for a late-stage fund to allocate most of the capital to secondary transactions. Industry Ventures raised $1.45 billion for the strategy last autumn.