Delta-v was founded with a focus on providing secondary liquidity to management teams, founders, and other investors including individuals, angels, venture funds, and LPs. We provide a win-win outcome when the diverging liquidity needs within a company’s stakeholder base run counter to shareholder stability and vitality. Secondary transactions provide an exit option for current holders who have a more pressing need for liquidity than the majority owners. Transactions can also serve to realign the incentives of the financial investors with founders and management, or to provide diversification to existing holders.
What is Secondary Liquidity?
Secondary liquidity or secondary direct investments are transactions in which an investor buys existing shares in an individual target company as opposed to investing new capital into the business as is the case with growth equity. Sellers often include management teams, founders, and other investors including individuals, angels, venture funds, and LPs. Shares sold may include common or preferred shares and are typically minority positions without control or a board seat. Many sellers choose to sell a subset of their holdings in order to maintain some residual upside through continued ownership.
Founders and Management
We understand that significant concentration of net worth in illiquid and relatively risky assets is often inappropriate as you consider your personal financial goals. We offer entrepreneurs the opportunity to diversify their personal portfolio in the same way that institutional investors have a diversified portfolio of investments within their funds. A partial sale of a growing and maturing stake in a private company can often re-align incentives between founders, management, and institutional investors. In many cases, interim liquidity for executive stakeholders who have been creating value over a long period of time provides them with an appropriate reward and further patience to drive the company to even greater heights.
Individual and Angel Investors
The need for liquidity in advance of the majority owners can often arise from a desire to reallocate capital to earlier stage investments. Further, personal circumstances can change over time given extended holding periods of some private companies. Regardless of the cause for considering early liquidity, many investors have found that a secondary sale of some or all of their shares is the proper financial strategy to pursue. This is the one form of exit where an individual or smaller holder of stock can control the timing.
The reduced volume of IPOs and upside M&A exits, combined with the increasing requirements for company maturity and scale at exit, have caused many General Partners to plan for managing their portfolio lives far beyond traditional or contracted holding periods. Delta-v can help GPs in unique situations such as a reserve shortfall, a replacement for a tired syndicate, or winding up tail end funds.
We partner with market leading companies with proven business models to provide the capital required to accelerate growth through targeted investment. Our goal is to help entrepreneurs create value through profitable growth. Target companies understand that investing to grow the business in strategic areas will allow them to achieve a higher trajectory.
Late-stage Growth Companies
We target growth equity investments in late-stage companies with at least $10 million in annual revenue growing at rates above 20%. We reduce investment risk by focusing on companies with proven business models.
Use of Proceeds
Growth capital can be used for a number of strategic investment purposes, but should have a targeted use with quantifiable results. While not an exhaustive list, examples of growth capital include global expansion, development of new distribution channels, expansion of sales operations, launching new markets, and strategic acquisitions.
You Don’t Need Capital
If your business needs capital to stay afloat, growth equity is probably not right for you. Our target companies don’t need growth capital to maintain the status-quo, but instead understand that investing in the business in strategic areas will allow them to achieve a higher trajectory.