StepStone’s latest VC secondaries fund arrives as competition grows

StepStone Group is marketing its latest venture capital secondaries flagship fund as competition grows from new entrants.

StepStone VC Secondaries Fund VI is targeting a slightly higher amount than its predecessor, which is the largest venture capital secondaries fund closed to date, a source familiar with the effort told affiliate title Secondaries Investor. Fund V closed on a record-breaking $2.6 billion in May 2022, according to Secondaries Investor data. Investors in that fund include the New Zealand Superannuation Fund, which committed $150 million, and the Oklahoma Police Pension and Retirement System, which committed $25 million, according to Secondaries Investor research.

StepStone VC Secondaries Fund VI has emerged as at least a couple of competitors have launched in the past few weeks. Pinegrove Capital Partners, a new VC secondaries fund from Brookfield Asset Management and Sequoia Heritage (Sequoia Capital’s wealth fund), is in the market targeting $2 billion, as Venture Capital Journal previously reported. Meanwhile, a new VC secondaries fund from growth investment firm Irving Investors and Oak Street Investments has closed on at lest $40 million, VCJ has reported.

StepStone CEO Scott Hart confirmed the firm is raising the vehicle during its earnings call earlier this month, and added that it is working towards a first close.

Other secondaries vehicles being raised by StepStone include its secondaries flagship StepStone Secondary Opportunities Fund V, which had raised approximately $1.6 billion as of June, Secondaries Investor reported.

There was a disconnect between secondaries opportunities that came to market in the first half of the year compared with what closed over the period, StepStone’s Hart said during the firm’s earnings call.

The bid-ask spread is closing, however, as valuations begin to stabilize, “particularly across private equity and even to some extent the venture space… which will give secondary buyers like ourselves a bit more confidence to transact in this market,” he added.

Buyouts made up 76 percent of investments in the first half. Venture capital and growth receded from 12 percent of volume in the first half of last year to 7 percent across the same period this year due to valuation concerns and the performance of tech indices, according to Evercore’s first-half report.

Additional reporting by Lawrence Aragon