An LP secondaries trading platform that was launched to disrupt the way smaller sized private markets fund stakes are bought and sold has received additional funding from VC firms and tech executives to expand its operations.
Tap, which was founded by two former tech executives, has raised $3 million from execs at firms such as cap table management software firm Carta, start-up funding platform AngelList, and VC firms Fin Capital, Courtside Ventures and Precursor Ventures, according to a statement shared with affiliate title Secondaries Investor.
Tap focuses on LP stakes worth between $100,000 and $100 million, an area that most secondaries intermediaries overlook, according to co-founder and chief executive Jeff Leathers.
“LP-led transactions are so templated and simple that most [investment] banks do not view them as worthwhile to pursue in comparison with GP-leds, which garner higher fees,” Leathers told Secondaries Investor. “The market is ripe for technology in a way that it was not five years ago.”
Almost two dozen secondaries trades completed on Tap last year, and the platform had $500 million in net asset value for purchase as of the first quarter of this year, the firm said.
“The platform includes investors for virtually every asset class and across many geographies, with a broad mix of secondary funds, family offices, ultra-high net worth individuals, sovereign wealth funds as well as endowments, foundations and public and private pension funds,” Tap said on its website.
Prior to founding Tap, Leathers was head of special purpose vehicles and fund formations at Carta. His co-founder, Thomas Krueger, built the product and go-to-market functions at NewStore, an enterprise technology start-up. Tap also counts Adam Augusiak-Boro, a former Evercore and Moelis & Co banker, as its head of capital.
Asked why he thinks his platform will offer something different to how LP trades are intermediated today, Leathers said the smaller end of secondaries trading is an untapped market, and institutional investors wanting to part ways with a sub-$100 million fund interest aren’t well served by the intermediary community. Tap’s pricing database and tech offering also helps broaden the number of potential buyers of a fund stake, which helps increase pricing for sellers, he added.
“One or two firms attempted to digitalize LP secondaries [more than five] years ago but since then, secondary markets have developed tremendously,” Leathers said, adding that there are now more than 35 funds with $1 billion-plus in AUM.
More investors are using secondaries to rebalance their private equity portfolios and as a more meaningful source of liquidity, according to new research from Coller Capital. Eighty-three percent of LPs are looking to sell on the secondaries market primarily to rebalance their portfolios, while 77 percent want to increase liquidity, according to the secondaries firm’s Global Private Equity Barometer Summer 2023.