The turbine raises $ 22 million to help VC investors get money without selling their bets

As the iPos slowed down to make it difficult a few years ago, the restricted partners investing in risk capital funds had a giant problem: liquidityS

The lack of cash returns is particularly disturbing for wealthy persons or their small family offices – who manage the assets of the wealthy ones – who have made significant investments in VC funds.

The presence of funds imprisoned in risk was a big problem for developer Mike Hearst. After selling Execuals (launching payments he founded) to City National Bank in 2018, he invests a good part of the proceeds from going into technology shares and risk funds.

At that time, the technological shares crashed in 2022, and Hurst told TechCrunch that he did not have enough free money to support his VC fund commitments.

“The companies continued to come for capital calls and new investments. I wanted to make them, but I didn’t want to mortgage the house, take a margin or sell Amazon at $ 90 when I found out he was returning to $ 21,” he said.

This experience gave Hurst the idea of ​​creating a credit product that would allow restricted partners to borrow funds secured by their position on LP in risk funds.

Hurst has turned his vision into Turbine, a debt platform for limited private capital and VC partners. The company is leaving Stealth on Friday and announces that it has raised a total of $ 22 million in funding, led by Alpha Edison and TTV Capital with the participation of Fin Capital, B Capital and Sozo Ventures.

The company has also provided up to $ 100 million in debt from Silicon Valley Bank to support the loan.

Turbine provides a way for limited partners to access funds using their funds as a collateral, similar to the credit capital line, using the value of the home or a margin line uses shares.

Guardier Garard, The co -founder and managing partner at TTV Capital said he was immediately excited about the turbine when Hurst put him on the launch.

“I had many incidents where LP approached me, asking for liquidity,” Garard said. But there were not many options for helping an investor in a fund to get some money.

Garard explained that TTV could sell some shares in a portfolio company in the secondary funds to help the investor, but he did not want to sell an asset early to serve the needs of only one LP.

Alternatively, LP could try sell their share .

Turbine claims that it offers the liquidity of investors in the value of their position in risk funds without giving up the future upwards. For example, if the initial investment of LP of $ 3 million in a fund has increased to $ 10 million, they can use this estimate of $ 10 million as a collateral for their loan.

The downside is that these loans are not cheap. Currently, the interest rate is about 9% (the basic percentage is currently about 7.5%, so many loans these days are not cheap).

But Garard claims that this can still be considered a “very reasonable course and much more cheaper than the price of sale” in the secondary markets, at a loss or even at a discount.

Turbine’s first customers are the five risk companies that supported their own capital. The common partners of these companies are already offering their access to LPS to the Turbine loan, Hurst said, adding that he plans to make his product accessible to more VC funds after today’s message.

“I couldn’t believe we hadn’t had anything similar for our LP,” Garard said.