- GIC oversees hundreds of billions of dollars in assets for Singapore’s government.
- Insider sat down recently with GIC CEO Lim Chow Kiat to discuss technology investing.
- GIC has backed Stripe, Snowflake, Zoom and a host of other tech companies.
GIC, Singapore’s sovereign wealth fund is keen on doing more in the secondary market, where private stakes in startups and VC funds change hands.
The IPO market is shut still, and M&A has declined. That means there’s pressure on distributions, which is the cash returned to VC and startup investors. In this environment, more investors will turn to secondary transactions, and GIC wants to be a liquidity provider in these situations, according to Lim Chow Kiat, CEO of the giant fund.
GIC has a private-equity team that specializes in the secondary market. GIC is also an investor in many VC funds. That means general partners, the people running VC funds, already know GIC and are more comfortable dealing with the organization, Lim explained in a recent interview with Insider.
There’s been a growing number of secondary funds and exchanges that help founders, employees, and even investors and VC funds sell their startup shares. Investors in venture funds usually have to wait until a company goes public or is acquired to see tangible returns. With secondary transactions, investors can sell all or part of their stake earlier.
The slump in startup valuations is beginning to push some investors to turn to the secondary market much more to offload positions, often at deep discounts. Tiger Global, which invested heavily during the previous bubble, is looking to sell, according to The Financial Times.
GIC is not exposed to some of the usual pressures of running a VC investment fund. Most funds operate on cycles of roughly 8 to 10 years. At the end of those periods, there’s often a rush to wrap up remaining startup stakes — even if those businesses are not ready to sell or go public.
GIC, in contrast, has only one investor, the government of Singapore. There’s no arbitrary end to its startup investment strategies, which means the fund can follow businesses throughout each stage of their evolution.
So as some VC funds look to sell in the secondary market now, GIC has more freedom to be a buyer.