David Weisburd

I want you to poke holes in it.

I want you to improve my theory.

I believe that continuation vehicles are coming to venture capital and I'll explain why.

First of all, continuation vehicles as a whole, they're growing quite fast.

They just passed $100 billion.

At TPG, I had Michael Wohlhaus, who has a $1.9 billion fund focusing on continuation vehicles and buyout opportunities.

He's so inundated with opportunities that he's literally reaching out to his competitors to co-invest with him, which is a sign usually of a lot of supply.

But here are the factors why I think continuation vehicles are coming to venture.

One is many funds, not the top 10 funds and the large funds, but are having an existential crisis where if they don't bring back DPI to their LPs, they're either on their last fund or they're never going to raise another fund.

So continuation vehicles themselves are considered officially a secondary, so they generate DPI.

So you do a continuation vehicles, you show DPI, and now you could go out and market it.

Two, around the same issue of DPI, if you're an LP that's back to fund in SpaceX, for example, you might be in there for 15, 20 years.

And sure, it's great to have a 15, 20x on paper.

But at some point, LPs are going to demand that.

And because now it's a buyer's market in terms of LPs dictating to GPs what they want, I feel like there is going to be some pressure from LPs to GPs.

And then thirdly, of course, I just love continuation vehicles.

I'm just going to reveal my bias.

I have no economic stake in them, but I just think there's a lot of interesting aspects of it.

I think it's maybe an A minus solve for DPI for LPs as well.

And then also a lot of GPs have a lot of asymmetric information, especially if they're on the boards of these companies.