The relatively new generation of entrepreneurs probably only experienced the era of “easy money,” an era that also made investors more competitive, less meticulous in their decision-making processes, and more eager to close deals. All this for a piece of the action of the last decade. All for a promise that now seems difficult to keep.

Times are changing and investors are now realizing that declining market liquidity requires a new and different strategy for valuing investments.

Titan Capital Partners, which just announced a new $100 million global fund, claims that the rapidly changing reality can also be an opportunity. With cash being a particularly important safeguard, they base their investments on this key factor.

“A transactional strategy allows us to take advantage of market volatility. Stakeholders are prioritizing easily accessible cash over profits 12 years after a bad M&A deal,” says CEO Ben Topor. “We monitor thousands of data points about each of the shareholders of the companies we have our eyes on; this, together with the knowledge of companies’ stock structure and liquidation preferences, allows us to predict and predict secondary situations faster than others.

Through its secondary program, the fund intends to meet shareholders’ need for liquidity. Secondary transactions are an important tool for realigning and balancing shareholding bases.

According to Topor, the current momentum leads different investors to put pressure on the CEO and the founding team and leads to premature sales. Secondary transactions, he insists, make it possible, today more than ever, to align these conflicting interests internally.

The fund is expected to execute between 10 and 15 trades, with an investment of up to $15 million per trade. It primarily focuses on software and internet companies that raise a Series B round or higher, and has rigorous financial investment criteria that only includes companies that have at least $10 million in sales and growth. annual of at least 80%. “We are very selective about the companies we partner with, and therefore look at hard-to-hide financial credentials.”

One of Titan’s most notable investments is a $14 million investment in primary and secondary capital. in Verbit.AI, Israel’s fastest growing tech company.

“The secret to venture capital,” says Topor, “is access. The flexibility of structuring and a combination of investments in corporate vehicles and funds is a significant multiplier in the market.”

Unlike traditional funds that primarily deal with management teams, they foster relationships with shareholders and limited partners. “We provide liquidity to angel investors, funds, LPs, founders and employees who want to obtain liquid assets unrelated to the performance of the underlying company.”

Russian affect

Topor says the secondary market is heavily affected by policies that inevitably begin to reshape the market: “One of the interesting trends we’ve seen in recent months that has affected the secondary market has been regulatory changes to the market. against some venture capitalists. The Chinese government now discourages foreign investment in funds and companies and more recently we have heard about global sanctions against Russia. Due to these circumstances, we have seen an increase liquidity demand in Chinese and Russian investments.

That said, he says shareholders with ties to Russian investments are now exploring their strategic options. “We’re also seeing management teams from tech companies who want to reduce the involvement of some of the Russian-linked investors. We haven’t seen the ‘forced seller’ dynamic so far,” says- it, referring to a situation that interests investors. for sale at a given price.

With a flood of valuations in recent years, the fund suggests there is a new method for investors to determine intrinsic value and the correct valuation for entry. “Too many funds are passive and have strict valuation policies that limit their flexibility. We do an up-to-date assessment of the business and do not rely solely on the last round. We act very quickly, taking a record two to three days to make a decision once we have the necessary information. Most importantly, fund partners personally assess companies and funds and do not delegate tasks to junior analysts without personal connections or experience. Topor adds, “We use historical, cycle-resistant, publicly comparable companies to analyze companies across all areas of expertise. We focus on the software and internet industry which has historically traded between 1 and 5 multiples of revenue depending on growth momentum and profitability. Today, public valuations have fallen from 12 times forward earnings to 5 times or less since the highs of October 2021. Going forward,” he adds, “we expect the market to continue to decline to provide us with exceptional buying opportunities in the coming year.

They say having hope means being uncertain about the future, being open to possibilities, and being dedicated to change from the bottom of your heart. When it seems that the financial future is rather unpredictable, it can be a good opportunity to rethink strategies, evaluate investments differently and set new goals. The future could come faster than you think.


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