VC Funds Are for Sale—at a Discount
The Takeaway
• Nokia pension plan sells VC fund stakes
• Lee Fixel’s family office sells dozens of early-stage fund stakes
• Buyers hunt for fund stakes at steep discounts
The year 2025 was supposed to bring a cash windfall to venture capital backers, as companies that had delayed going public finally made the leap.
That hasn’t happened. With a roller-coaster stock market delaying many long-anticipated initial public offerings, the limited partners in VC funds have been finding new ways to cash out of their stakes in private tech firms. Some are selling their ownership of VC funds. The VC funds in turn have been putting their own startup stakes up for sale. That means ownership of hot startups like Stripe and Databricks are sometimes up for grabs.
Earlier this year, telecommunications equipment maker Nokia told some U.S. VC funds that one of its pension plans was selling its stakes in those funds, unloading positions worth at least several hundreds of millions of dollars, according to a person involved in the discussions. Lexington Partners, a New York investment firm that specializes in buying VC funds and startup stakes from other investors, bought some of those stakes. Nokia and Lexington Partners declined to comment.
“A lot of [limited partners] came into 2025 hoping for a functioning IPO window and productive M&A markets,” said Brian Borton, managing partner at StepStone Group, a New York–based investment firm. “But with the recent volatility, hopes have been dashed.”
StepStone’s VC team in the last few weeks has been evaluating six portfolios, worth more than $2.5 billion altogether, in VC funds that are up for sale. The size of portfolios ranged from $200 million to $700 million each, he said.
Deals of this size and number have been “limited to nonexistent” in recent years, he said. If there were deals, they would have been “one-off in nature and typically smaller.”
For decades, VC’s limited partners could rely on funds to return their cash once the funds reached the seven- to ten-year mark and the startups they backed went public or sold. In the last three years, that largely hasn’t happened, thanks to the dearth of IPOs.
Instead, funds raised just before or during the pandemic have invested billions of dollars in startups that have since lost value. And these startups usually don’t have any chance of going public soon.
“Everyone felt rich in 2021, and now they’ve overcommitted to long-term illiquid assets,” said Ben Black of Akkadian Ventures, a San Francisco–based venture firm that buys stakes in growth-stage startups from other investors. “They made their commitments when times were great but now…there’s very little distribution.”
The pressure has forced both VC funds and their limited partners to seek other ways to find cash. Global secondary transactions, which include sales of stakes in private startups and venture funds, rose 45% last year to a record $162 billion, topping a 2021 high, according to data from Jefferies, an investment bank that acts as an adviser to secondary buyers and sellers.
In one of the most notable examples of its kind, Yale University hired advisory firm Evercore to help the university sell billions of dollars in private equity fund investments from its $41 billion endowment.
Nassau Financial Group, a Connecticut-based financial services firm with roughly $25 billion in assets under management, has hired VO2 Partners, an asset management and advisory firm, to assist in managing its venture portfolio, including potentially exploring sales of its stakes, according to Laurence Levi, a partner at VO2 Partners.
Collectively, limited partners sold $87 billion in fund stakes last year, up 45% from the prior year, according to Jefferies.
These institutions and wealthy individuals are looking to sell their fund stakes as cash distributions—usually generated when a startup goes public or sells to another company—have fallen to historic lows. That makes it hard for endowments to meet their own distribution needs, such as assisting with tuition and funding research, and for pensions to make payments to their members.
Bill Coaker, chief investment officer of family office Decas Capital and former chief investment officer of the San Francisco Employees’ Retirement System, said five out of seven VC funds he met with this year have had “low to zero DPI,” the distributed to paid-in capital ratio that measures the cash VC firms have returned to investors. These funds were at least five years old, a point at which they typically make some cash distributions.
Family offices, the firms set up to manage wealthy individuals’ money, are also shedding some investments in VC funds.
Last year, the family office of Lee Fixel, founder of VC firm Addition, sold dozens of stakes in early-stage funds, according to a person familiar with the sale. Some sold at a discount of more than 50% of their value, according to the person.
VC funds, for their part, have been more aggressively pruning their stock portfolios to return cash to investors. Sales initiated by VC firms’ general partners jumped to $75 billion last year, up 44% from the year prior, according to Jefferies.
Firms such as Insight Partners and Lightspeed Venture Partners have set up continuation funds, which allow limited partners in a venture fund to sell startup stakes to other limited partners, who become part of the new investment vehicle.
Some VC funds are engaging in strip sales, or selling a slice of a fund’s stake in a collection of companies. Basis Set Ventures, a San Francisco, Calif.–based early-stage venture firm, last fall sold part of its first, $136 million fund in a strip sale after one of its limited partners approached founder Lan Xuezhao.
Xuezhao initially hesitated, but she realized the sale would help the seven-year-old fund deliver cash returns back to her limited partners.
As a result of the sale, the fund’s realized value was roughly five times the invested capital.
“Psychologically, I feel good giving cash back. I sleep better, I can make decisions differently knowing that I returned cash,” she said.
Interest from VC funds in selling startup ownership has been so high that StepStone created educational materials and webinars for general partners to explore liquidity options such as strip sales and continuation funds about 18 months ago. The firm also offers software tools enabling the funds to analyze their DPI against those of their peers and against benchmarks.
Buyer’s Market
The demand has created a bonanza for specialty funds that hunt for exposure to startup stakes on the cheap, sometimes at a discount of as much as 50% to the net asset value—the value of the underlying portfolio companies.
These VC secondary funds look to make two to three times the cost of their investment, or net annualized returns between 20% and 35%, with the goal of getting money back within four to five years, said Borton.
There are so many would-be sellers that some transactions fizzle, say investors.
Menlo Park, Calif.,–based venture firm IVP last year explored selling some assets in one of its funds, including stakes in Klarna and Dataminr. But the sale didn’t happen after IVP and potential buyers of the assets couldn’t agree on price and structure, according to a person familiar with the process.
The collapse in tech stocks after the Trump administration announced deep tariff hikes in late March has also stymied some deals after prices dropped for sellers. But some buyers expect more deals to happen as limited partners accept discounts.
Discounts for stakes in VC funds are getting bigger, said Hans Swildens, CEO and founder of Industry Ventures, which invested roughly $1 billion last year, including buying two portfolios from corporations’ VC arms.
He said that’s because with so few IPOs in the pipeline, limited partners are wondering, “How long are you going to hold these assets?”