Savano Capital Partners

Is this the golden era of secondaries investors??? Post the pandemic SPAC bonanza and with the IPO market still anemic, direct secondaries investors, like Savano Capital Partners, provide much needed liquidity to investors and employees at attractive valuations. I had the pleasure of attending Savano Capital's investor conference and took away the following themes and questions from the panels: Current AI applications in business: o??Integration into customer-facing products o??Streamlining business process and improving internal efficiency o??Onboarding / customer implementation AI and Cyber: o??AI is being used to make phishing attacks more believable o??Gen AI can be a force multiplier to do more with less, especially given the need for more cyber professionals o??“Magical” product features - Build for creativity, see what it can do / what problems it can solve rather than only building for a specific use case o??AI guardrails for active data protection Business Environment: o??Pull forward of demand during the pandemic resulted in slower sales in the last year or two for enterprise software o??Longer sales cycle, lower upsell, more cost rationalization, creative contracts, etc o??Growth driven by net new rather than upsell o??Large equity raises led to high business spend but hasn’t necessarily driven sales – can’t buy sales in this environment? IPO: o??When will the IPO market open? What is the catalyst? Is the backlog greater than market can handle? How will companies growing at +50% be valued in the market, are there fair comps? o??Companies thinking of going public need to build the internal infrastructure to perform and report as a public company. o??Can you consistently deliver on a quarterly basis and do you have the team, process, CFO, etc needed? o??Revenue range for IPO: +$300M o??Secondaries market is attractive: New investors get access at good valuations and company employees get liquidity with low effort, avoid additional dilution / control issues, less reporting and cost compared to an IPO Investing: o??Is a private capital reset due - too many startups and too much investor money floating around, a recipe for losses? o??Investors have not set aside enough dry powder / follow-on funds for all existing investments. Will have to pick and choose which portcos to support. New rounds could be left to the free market and could result in down rounds o??VCs on their first or second fund with no distributions will struggle to raise Continuation Vehicles: o???Continuation Vehicles coming to the VC world as an alternative to going public, outside rounds, or a sale o???Provide liquidity to LPs while GPs maintain control over their best assets o??Repricing of assets solves unrealized gains problem o??NEA, Insight Partners, and Lightspeed have recently offered continuation funds Great event, Thomas Smith and team! #InnovationBanking CIBC Innovation #VentureCapital #Secondaries