| | October 2022 8OPINIONIN MYBy Pierre-Emmanuel Besnard, Investment Director, LIAN Group (SGX: L03) 2021 was one crazy year for the venture capital industry. From a global perspective, it was the biggest year ever for IPOs, with 399 offerings amounting to a collective raise of $142.5 billion. It seems that there is only too much capital. Despite rates rising, liquidity keeps flowing in private markets. Money is no object. But what is then? Founders now have the luxury to be picky about who sits on their cap table. Do they always go for the largest, most popular funds? Well, not necessarily. Leaving artificial timelines behindSequoia Capital was one of the first large private equity companies to switch its strategy. Indeed, they decided to abandon the traditional fund structure with its artificial timeline for LP capital. There will only be a single permanent structure called the Sequoia Fund which will be an open-ended liquid portfolio made of public positions of their companies.This comes in as a clash with the traditional 10-year funds, which put buy and selling pressure on the fund manager. The capital had to be deployed in the first year, resulting in non-optimal acquisition just for the sake of capital deployment. In the same logic, when the fund reached its time limit, many exits were performed way too early, resulting in important profit opportunity losses. This new way of operating gives the opportunity to treat every opportunity in an optimal manner, buying when convenient and liquidating holdings only when the investment will have fully matured.Venture Capital is changing, Here's How Pierre-Emmanuel Besnard
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