Secondary

Flashpoint invests in later stage technology companies already achieving significant revenue from international markets while leveraging their access to local talent from their place of origin.

Strategy

  • We predominantly provide secondary liquidity to early stage investors and existing or former employees, including the founders.  Our investment can also be combined with some primary capital for the company itself. 
  • We normally invest between major rounds of financing.
  • We can be flexible about our initial check sizes and look to grow our investment over time as the investee companies develop.
  • We are seeking minority positions which qualify for Board participation or extensive information rights, allowing us to be a reasonably active and value-added investor.
  • Within the tech universe, we are largely sector and business model agnostic as our later stage focus means that our target businesses are well proven in terms of product and sales viability.

Investment criteria

The secondary product requires us to be flexible and creative in our approach. Some of the criteria we are looking for:

  • Exceptional founding team that has built a market or segment leader.
  • Large and growing market allowing considerable further growth.
  • Run-rate revenues >= US$10m, or the visible achievement thereof, and 50%+ annual revenue growth.
  • Early stage shareholders keen to access liquidity for reasons unrelated to the company’s own prospects and founders welcoming us into the cap table. 
  • Visible path to future liquidity

Benefits

For Founders/Employees

  • Ability to get partial liquidity to cover lifestyle needs while not burdening the company cash flow.
  • Option to retain and/or capitalise on pre-emption rights at future funding rounds.

For the Shareholders

  • Opportunity to de-risk investment positions (fully or partially). 
  • Liquidity planning to fit investment horizon criteria or fund life limitations.

For the company

  • Rationalise a fragmented cap table and the associated shareholder management.
  • Restructure the shareholder base to achieve a more institutional profile.
  • Gain a constructive shareholder with domain expertise and regional network access.
  • Alleviate shareholder pressure for liquidity, which might otherwise restrict further company development.

For more information about Secondary, read the articles: The Rise Of Secondaries In Tech, Second is the New First-I, Second is the New First-II.

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