Secondary Share Opportunities

Andrew describes pivoting his AngelList rolling fund ($12M/year) to focus on secondary investments and minority buyouts during market downturns, using more conservative deal structures to reduce risk.

Key Points:

• Investment Focus:

  • Secondary shares
  • Minority buyouts
  • Examples: Founders wanting to buy out business partners or get liquidity

• Deal Structures:

  • Non-binary deals:
    • Valuation tied to revenue/earnings targets
    • Different valuations based on performance
  • Structured deals:
    • Guaranteed 15% return in liquidation/dividend scenarios
    • $5M valuation example with downside protection

• Investment Criteria:

  • "Default alive" businesses
    • Can survive without raising next round
    • Not dependent on future fundraising
  • Conservative approach vs traditional venture bets
    • Avoiding high-risk early stage deals
    • Not investing in companies with high valuations relative to revenue

• Strategy Rationale:

  • Risk mitigation during market uncertainty
  • Focus on businesses with clear paths to profitability
  • Structured downside protection
  • More conservative than typical venture investing