Turbine raises $22M to help VC investors get cash without selling their stakes

Summary

Since IPOs slowed to trickle a few years ago, limited partners who invest in venture capital funds have had one giant problem: a dearth of liquidity. Lack of cash returns has been especially troublesome for wealthy individuals or their small family offices – who manage the assets of the wealthy – that made substantial investments in VC funds. Having funds locked up in venture capital was a big issue for entrepreneur Mike Hurst. After selling Exactuals, a payments startup he founded to City National Bank in 2018, he invested a good portion of the proceeds from the exit into tech stocks and venture funds. Then the tech stocks crashed in 2022 and Hurst told TechCrunch that he didn’t have enough free cash to support his VC fund commitments. “Firms kept coming for capital calls and new investments. I wanted to make them, but I didn’t want to mortgage the house, take a margin line or sell Amazon at $90 when I knew it was going back to $210,” he said. That experience gave Hurst the idea to create a credit product that would allow limited partners to borrow funds secured by their LP position in venture funds. Hurst turned his vision into Turbine, a debt platform for limited partners in private equity and VC. The company is coming out of stealth on Friday and announcing that it has raised a total of $22 million in equity funding co-led by Alpha Edison and TTV Capital with the participation of Fin Capital, B Capital, and Sozo Ventures. The company has also secured up to $100 million in debt from Silicon Valley Bank to support its loan making. Turbine provides a way for limited partners to access funds using their fund stakes as collateral, much like a home equity line of credit uses home value or a margin line uses stock holdings. Gardiner Garrard, co-founder and managing partner at TTV Capital said he instantly got excited about Turbine when Hurst pitched him on the startup. “I had many incidents where an LP approached me, asking about liquidity,” Garrard said. But there wer...