Inside the Revival of Venture Capital Liquidity with an Industry Pioneer

Hans Swildens (0:00)

One thing that's interesting in our market that's starting to happen is that even participants in the secondary market are starting to get liquidity through secondaries, which historically had never happened. There's so much capital sitting in the system that it's not enough liquidity to give back to the market. And so we think that the venture growth market on the secondary side of the market can be larger than the primary. I think this is one of the most exciting times I've ever seen for investing, and I think we're just beginning in it.

Michael Brandmeyer (0:28)

Welcome to Goldman Sachs Exchanges, Great Investors. I'm Michael Brandmeyer. Venture capital has a liquidity problem. Companies are staying private longer, exits have slowed, and limited partners are asking a simple question, when do I actually get paid? My guest, Hans Swildens, built industry ventures around that question, growing it into a leading venture secondary specialist with roughly $7 billion in assets under supervision. Before agreeing to combine with Goldman Sachs Asset Management in January of 2026

Today, how severe is the venture liquidity crunch? What's real in AI? And why he finally said yes to being acquired?

Hans, welcome to Great Investors.

Hans Swildens (1:17)

Thank you for having me.

Michael Brandmeyer (1:18)

For our listeners that may not be focused on secondaries all the time, if I'm an early entrepreneur, if I'm an early VC investor, or even a later stage investor, what are the reasons that people are selling to secondary players like you?

Hans Swildens (1:34)

Well, the reasons have been changing over time. When we first started 26 years ago, most of it was distress sellers, sellers that no longer wanted the investments anymore, like a corporate venture capital fund decided to terminate their investments, and then sell the portfolio or a hedge fund decided to stop making private investments and just concentrate on liquid securities and sell their private portfolio. A lot of it was distressed sellers, just exiting things they didn't need or want anymore.

And then that evolved over time to include sellers that had made a big gain. And I would say a vast majority of what we've been purchasing over the last 10 years has been giving gains to investors. We also have been buying portfolios at losses to the original cost as well. But I would say that that's tilted over the last 10 years so that you see sellers using the market for portfolio rebalancing or profit taking or risk management. If a single position in their portfolio outweighs everything else that they can trim it, more traditional portfolio management reasons to sell securities.

Michael Brandmeyer (2:47)

Let's go down one level to what's actually happening in existing venture capital portfolios. Because if you talk to investors, be the entrepreneurs or limited partners or venture capitalists, there's just a huge illiquidity problem out there. What's going on? Is it a problem of marks? Is it a plumbing?

What are the big issues that you're seeing that are holding us back from a liquidity standpoint?

Hans Swildens (3:09)

I think it's everything. There's a cross-current of AI growth and non-growth due to AI in the private market. That's one issue. I think the NAV marks, some of them are undervalued, some of them are overvalued, and that's becoming more extreme of whether or not something's very overvalued or very undervalued because of the way NAV is held in the funds. I think there's also concentration in the market now around certain names. You're seeing a lot of crowding in the top 25 private names. In the market, when you go beyond the top 25 private names and there's 30,000 private companies, the market gets pretty illiquid. And then in terms of M&A and IPO activity, which has been challenged over the last five years, we're starting to see that accelerate. But there's so many illiquid companies and so much NAV is illiquid. I think McKinsey came out and said they thought it was over a trillion in prior funds. And then other people came out and said it's over three trillion in prior funds. So there's so much capital sitting in the system that even a few IPOs, or let's say normalizes to 50 or so IPOs per year, it's not enough liquidity to give back all the capital into the market. So you're seeing a lot of structuring around secondaries in the primary financing events with tenders in the companies, seeing a lot of restructuring of funds with CVs, you're seeing a lot of LPs exiting different funds at different times to get cash to fund other funds they're funding. And so that's just generating more trading activity.

Michael Brandmeyer (4:42)

So given all this illiquidity, what are you seeing with buyer and seller expectations? And does it depend on when the companies were funded?