A venture firm backed by some of the world’s most famous entrepreneurs has its sights set on the secondaries market.
Village Global is the seed investor behind Liquidly, a trading platform for private fund stakes, affiliate title Secondaries Investor has learned. The New York-based company was founded in 2018 by former Goldman Sachs trading executive Anusha Harid-Paoletti.
“We see a $7 trillion-plus asset class that somehow still lacks enterprise-grade trading infrastructure on the secondary side, and we thought Liquidly could unlock tremendous opportunities with its platform to further this market,” said Adam Corey, co-founder of the San Francisco-based venture firm.
He said Liquidly’s “sophisticated trading technology, rigorous regulatory and compliance features and an exceptional user-experience” were among its most attractive features.
Village Global is an early-stage VC firm supported by a network of entrepreneurs, including Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg and Microsoft founder Bill Gates.
Other investors in Liquidly include insurance company Amtrust Financial Services, Barclays and the VC arm of law firm Cooley, according to sources familiar with the company.
Liquidly plans to open its first trading window in Q4 with Beneficient to act as liquidity provider, Secondaries Investor understands. Dallas-based Beneficient buys illiquid assets from individuals and institutions with less than $1 billion in assets.
On the sell-side, Liquidly will initially target private bank feeder funds, which smaller LPs use to invest in private markets. This approach should result in larger transaction sizes and lower frictional costs than dealing directly with the LPs.
Several stake-trading platforms have emerged over the years with varying degrees of success. It is difficult to execute trades in a market where transfer agreements are often customized and general partners have the final say over who can invest in their funds, Secondaries Investor noted in September.
There is a huge prize for any platform that can crack the market. High-net-worth allocations to illiquid assets could represent an additional $1.5 trillion in assets under management by 2025, according Morgan Stanley‘s 2020 Wealth and Asset Management: Competing for Growth report.
Last January, Secondaries Investor reported that Lexington Partners was to become a designated buyer of stakes sold by investors on Moonfare, a Berlin-based platform that allows individuals to invest in private funds.
“We listened to the market, and illiquidity was one of the main concerns left standing between individual investors and allocations to private equity,” Moonfare founder and chief executive Steffen Pauls said at the time.