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Secondary purchase

Secondary purchase Acquisition of the investments of a venture capital company by another equity investment firm

In a secondary purchase, a venture capital fund sells off portfolio companies that are not developing according to plan and would otherwise have to be written off completely. Sometimes, a venture capital company will sell off its entire portfolio if it is uncertain that follow-on financing will be available. Typically, the buyer acquires holdings that are in a more mature stage of development, thereby avoiding the riskier early phase. For the start-up company, a secondary purchase is usually associated with considerable risk, but may be its only chance for survival

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