Exits & Secondaries
Fund lifecycle work: follow-on reserves, structured secondaries, strategic sale processes and returning capital to limited partners without forcing an outcome.
Venture funds have a finite life, and the way a firm behaves in years seven to eleven tells you more about it than anything it says in year one. This practice area covers what we do with capital after the first cheque and how we eventually return it.
Reserves and follow-on
Reserves are decided at entry. When we invest, we model a follow-on allocation against specific milestones, and we tell the founder what it is. That number is not a promise — it is a plan that survives contact with evidence. We deploy reserves where a company has demonstrated the thing we said we needed to see, and we decline to deploy where it has not, even when the round is otherwise attractive.
Our pro-rata right exists so that we can maintain a position in companies that are working, not so that we can average down into ones that are not. Where we decide not to follow, we say so directly and early enough that the founder can build the round without us in the model. Signalling risk is real, and the only way to reduce it is to be predictable and to explain the reasoning to the incoming lead if the founder wants us to.
We will not use a follow-on decision as leverage to renegotiate terms agreed in an earlier round. If we are not participating, the reason is the business case, and we will put it in writing.
Secondaries, in both directions
The secondary market for private shares has matured to the point where it is a normal part of fund management rather than a sign of distress. We participate on both sides.
As a seller, we may sell part of a position in a later round or in a structured process when a company has grown well beyond our entry point and the fund’s concentration warrants rebalancing, or when the fund is approaching the end of its life and holding to a distant exit would be unfair to limited partners. We do not sell into a company’s primary round in a way that competes with it for capital, and we tell the board before we run a process.
As a buyer, we occasionally acquire shares from early angels or departing employees where we know the company well and the price reflects a genuine liquidity need rather than a view we disagree with. Where a company runs a tender offer to give long-tenured employees partial liquidity, we generally support it: an employee who has waited six years for a payslip-sized outcome is a retention risk, and a modest tender is cheaper than the alternative.
Sale processes
Most outcomes in this sector are trade sales rather than public listings. The buyers are predictable in category if not in name: ticketing and live-entertainment incumbents, payments and identity companies moving into venues, media groups buying data capability, and the larger sports technology platforms consolidating adjacent products.
Where a board asks us to help, we contribute what we can see from the outside: which acquirers are actually integrating rather than acqui-hiring, how the sector’s recent transactions were structured, what an earn-out tied to renewals really means when the underlying contracts are seasonal, and where a founder’s continuing obligations after closing are worth negotiating harder than headline price. We do not run the process ourselves and we do not take a fee for advising on one.
No forced outcomes
We do not use protective provisions to force a sale, and we do not build drag rights that let a minority holder push a company into a process a founder opposes. If our fund’s timeline and a founder’s ambition genuinely diverge, the correct answer is a secondary sale of our position, not the compression of a company’s life to fit a fund’s.
Distributions and reporting
Proceeds are distributed in cash where we can, and in kind only where a distribution in specie is genuinely in limited partners’ interests and permitted by the fund documents. Every realisation is reported in the quarter it happens, with a written explanation of the outcome relative to the original thesis, including the ones that did not work. Valuation policy is documented, applied consistently, and disclosed to limited partners; positions are marked to the most recent priced round or to a defensible fair-value assessment, and we say which method was used for each material holding.
We do not publish performance figures on this website. Prospective limited partners can request the firm’s materials at contact@sporttechgem.com, and they are provided under a non-disclosure agreement to qualified investors.
Building in exits & secondaries?
Tell us what you have shipped, who is paying for it and what you are raising. We read everything ourselves and answer with a written reason either way.