StepStone argues that the focus in venture secondaries should shift from discount-hunting to asset quality. Their research shows that deep discounts often underperform, while concentrated investments in high-conviction companies drive stronger outcomes. The paper emphasizes that venture secondary success hinges on backing winners, not bargains.
Why asset quality drives venture secondary returns
Stepstone
Research
6 Pages
Key Takeaways
High discounts underperform: Stakes bought at over 15% discounts tend to yield weaker returns than smaller-discount purchases.
Winners drive returns: A small number of outlier exits account for a disproportionate share of overall venture performance.
Concentration pays off: Funds with fewer than 10 holdings delivered top-quartile returns far more often than broadly diversified ones.
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