Rather than traditional private equity firms, Second Alpha makes secondary investments in private companies, purchasing shares from existing shareholders – founders, executives, angels, VCs or corporate investors. In addition, the firm invests in situations involving debt conversions, restructurings, recapitalizations or pay-to-play financings.
Second Alpha was founded on the conviction that ten years is a too long a time for any shareholder to wait to receive some liquidity for an investment. Beyond their direct effects on investor returns, the long holding periods that have developed since the Dotcom Era have also threatened to disincentivize entrepreneurial risk taking and limit innovation. Second Alpha sees itself as a pioneer in the type of value-added secondary investing that is a natural and highly complementary component of the evolving venture cycle.
Behind the scenes, Second Alpha relies on a great deal of careful data analysis to identify the types of companies in which it invests. The work that the Second Alpha team puts into its research helps to create more efficient due diligence processes, facilitate faster investment decisions and drive better results.
Second Alpha serves a vital new function in the innovation community. The firm enables entrepreneurs, VCs and other investors to achieve partial or full liquidity within a reasonable time frame without having to force a company into an exit process before it is ready. Second Alpha takes on a supportive role in investor syndicates, providing capital, advice and energy to companies at key moments in their life cycle, and its team members leverage extensive industry experience when active board participation is required.
Second Alpha focuses its investment activities on private companies with proven business models, solid product offerings and good prospects for future growth. Companies that fit Second Alpha’s maturity criteria include:
- Mature venture-stage, growth equity and middle market firms
- Companies with at least $20 million revenues
- Companies either profitable or with a defined path to profitability
Second Alpha is particularly interested in companies that have a large portion of their businesses based on highly-recurring revenue models (e.g., subscriptions, term licenses, highly-recurring transactional models, etc.).
Second Alpha invests in companies operating within Technology, Media and
Telecommunications (TMT) .
Second Alpha primarily invests in companies headquartered in the United States and Canada. Occasionally, Second Alpha will consider investments in private companies headquartered in other countries.
Second Alpha is very interested in the following types of transactions:
- Purchases of partial or full shareholder positions from founders or company management
- Purchases of partial or full shareholder positions from angels, VCs, corporate investors or private equity firms
- Purchases of convertible debt
- Leading or participating in rounds of fresh capital in tandem with a purchase of shares from existing investors
- Recaps, pay-to-plays and restructuring
In addition, Second Alpha will consider purchasing portfolios, partial portfolios or specific strips of direct venture investments from investors seeking short-term liquidity.