Isomer Capital has announced the first close of its new VC Secondaries fund. The fund was created to “capitalise on the high potential and limited liquidity solutions” seen in European venture capital.

A secondary transaction is a scenario where existing stakeholders, such as early-stage investors, founders, or employees, decide to sell their stakes in a company to new (or existing) investors. 

The market for secondaries is growing, mainly due to liquidity challenges for Limited Partners (LPs) in a sluggish exit environment; the last quarter of 2023 saw the lowest exit activity in over a decade according to Pitchbook.

A spokesperson for Isomer Capital said that “many investors are seeking to generate distributions or rebalance their exposure to European tech”, indicating that the “drought” that has characterised the past year of European fundraising may not bounce back, but that investors may abandon their investments altogether.

The secondaries fund has raised over €20M of its €100M target to be used for buying shares from VCs.

“The European venture capital secondaries market is set to explode over the coming years. We are excited to expand our capabilities, having declined so many great secondary deals over recent years because they did not fit into our main fund’s highly focused mandate. Isomer’s new dedicated secondary fund will allow us to expand our reach not only in deal size, but also in our collaboration with VCs and companies we have known for years, but that are not yet in our GP portfolio. 

“Europe currently has the highest stock of venture capital-backed assets in its history. At the same time, many investors are looking to rebalance, reduce and de-risk their private market programmes. The need for liquidity has never been higher, and solutions are few and far between. So it’s a great time to buy for those with access, analytics and capital to deploy.”

Since its inception, Isomer Capital has invested in over 80 VC funds, with groups like Seedcamp, Atlantic Labs, Entrepreneur First, FRST, and OTB as well as 31 co-investments and secondary transactions.