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Welcome to the very last issue of The Exchange<\/a>! With TechCrunch+ sunsetting this month, The Exchange column and its newsletter are also coming to an end. Thank you for reading, emailing, tweeting, and hanging out with us for so many years.<\/em><\/p>\n P.S. A special thanks from myself to Anna, who was nothing short of a brilliant lead author for this newsletter since taking it over. She deserves endless credit for her work on the email.<\/em><\/p>\n Today on The Exchange, we\u2019re digging into continuation funds, counting down through some of our favorite historical Exchange entries, and discussing what we\u2019re excited to report on for the rest of the year! \u2014 Alex<\/p>\n Continuation seemed like an apt theme from our perspective. It is also a very topical one: \u201cThe greatest source of liquidity now is going to be continuation funds,\u201d VC Roger Ehrenberg predicted in a recent episode<\/a> of the 20VC podcast.<\/p>\n In case you aren\u2019t familiar with the term, let\u2019s turn to the FT<\/a> for a definition:<\/p>\n Continuation funds, which are common in private equity [PE] but rare in venture capital, are a secondary investment vehicle that allows them to \u201creset the clock\u201d for several years on some assets in old funds by selling them to a new vehicle that they also control. This helps a VC fund\u2019s backers, known as \u201climited partners,\u201d to roll over their investment or exit.<\/p>\n<\/blockquote>\n If you have been following the last few months of venture capital activity, the \u201cwhy now?\u201d is easy to answer. As the StepStone Ventures team told our colleague Becca Szkutak in her December 2023 investor survey<\/a>: \u201cWith portfolios awash in unrealized value, fewer immediate exit opportunities, and longer hold periods on the horizon, GPs are beginning to get creative in order to generate liquidity.\u201d<\/p>\n In practice, a continuation fund sees new investors invest in existing portfolios, but \u201cit reflects today\u2019s valuations,\u201d Ehrenberg said. This repricing and the potential conflict of interest around it sound challenging in theory, but Ehrenberg doesn\u2019t think so. \u201cYou have net new investors looking at a portfolio, so they\u2019re the price setter, not the existing manager.\u201d<\/p>\n It\u2019s not just very large funds like Insight Partners<\/a> and Lightspeed<\/a> that can explore this option, either. \u201cIt\u2019s a viable strategy for a decent swath of the venture industry,\u201d Ehrenberg told 20VC host Harry Stebbings.<\/p>\n Whether it\u2019s continuation funds, strip sales or secondaries, there\u2019s a clear impetus for VC to look for solutions to its often ill-timed cycles, as we had already seen with the rise of permanent capital<\/a> and publicly listed funds. A common thread in today\u2019s economy is that projects and companies aren\u2019t given the time they need to fully succeed, so even if it supposes a temporary discount, it\u2019s good to hear that net investors are prepared to give portfolios more time to shine.<\/p>\n The Exchange began its life in late 2019, before it even had a name. It quickly became a daily column during the week, and later this weekend newsletter. For those of you interested in the historical quirks of building media products, The Exchange was a TechCrunch+ product on the site, but its weekend issue was sent out for free as an email. Why was that the case? Because at the time we didn\u2019t have the internal tech to send out subscriber-only emails!<\/p>\n Over the life of The Exchange on TechCrunch+ we shipped more than 1,000 columns and newsletters, making it the largest and \u2014 if we may \u2014 most impactful single project for driving subscribers to what was our paid product. The Exchange and TC+ were inseparable, so it makes sense that they are being retired together. Still, as with any project that mixed both work and personal passion, we\u2019ll miss it.<\/p>\n From its start, the $100 million ARR club and the early pandemic days replete with stock market collapses and fear, The Exchange was around to chronicle the 2020\u20132022 startup boom, and its later conclusion. We went from tallying monster rounds and a blizzard of IPOs to watching venture capital dry up and startup exits become rarer than gold. It\u2019s been wild.<\/p>\n Anna took over The Exchange\u2019s newsletter in early 2022<\/a>, around the time that Alex became editor-in-chief of TechCrunch+. The columns continued to be a group project, but we had to divide and conquer to keep our output at full tilt.<\/p>\n Below is a list of some of our favorite Exchange entries. Of course, we couldn\u2019t go back through the entire archive \u2014 which you can find here<\/a> \u2014 so consider this a partial download of the hits:<\/p>\n While The Exchange is shuttering, we still have big plans for coverage this year. Thankfully we\u2019re both still at TechCrunch, so you are far from rid of us. Alex wants to work on unicorn health, the state of debt financing in 2024, and how AI will find purchase at the OS layer. Anna is curious about AI hubs beyond San Francisco, GP stakes investing and whichever S-1 we can get our hands on.<\/p>\n Thanks again for reading The Exchange\u2019s post and newsletter. We\u2019re so very grateful to have gotten to spend so much time with you on this project. Onward and upward!<\/p>\n<\/p><\/div>\nContinuation funds<\/h2>\n
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RIP The Exchange<\/h2>\n
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We\u2019re not done<\/h2>\n