Fund Recapitalization

Since the burst of the bubble, the venture capital industry has been facing major challenges.
The number of IPOs has significantly decreased, raising the bar on the maturity level of VC-backed companies before they consider going public.
Trade sales on the other hand have been focused either above the $500m mark, or on highly disruptive technologies.
The venture capital industry witnessed many LPs fleeing the industry, making fundraising efforts for early stage venture capital firm lengthy, costly and unpredictable.
While secondary direct buyers have lined up to buy the assets of such funds at a deep discount, we believe that most VC portfolios just need more time and more follow-on capital to provide the level of returns that is expected from the asset class.
While mainstream fundraising has become extremely challenging for a non-brand name venture firm, creative portfolio restructuring may help the firm achieve the following:

• Raise additional capital for follow-on investments, which will allow the firm to finance the growth of portfolio companies in a timely manner, protect the firm’s initial investments against dilutions, and maintain their level of influence within portfolio companies
• Buy more time for portfolio companies to reach a natural exit point
• Generate a new stream of management fees and protect the financial viability of the firm 
• Renegotiate the high-water mark for the calculation of carried interest