Dell sells Venture Portfolio

Filed in archive Venture Capital on January 21, 2005

VentureWire reports that Dell is selling parts of its venture portfolio to Lake Street Capital. lake Street Capital as it turns out is specialized in this secondary market and is buying portfolios of existing investments from other investors.

This niche has some obvious benefits:

- less effort for due diligence (more or less one portfolio of companies with one structured reporting)
- proven investments (or they would not be in someones portfolio anymore)
- a better risk adjustment based on prior performance of startups

On the downside I see:

- nobody will sell the stars in a portfolio (IPO candidates)
- the often mediocre performance of investments can make exits tough

But no doubt in good times (when market volatility is high or boom times ahead) such a secondary market approach can be a huge leverage to profits.