As a venture partner with TTV Capital, Mike Hurst saw the liquidity challenge firsthand after the tech market reset in 2022.
VCs were hesitant to call capital and were not actively investing at a time when valuations had reset, he recalls. Founders with “excellent products and progress” were struggling to raise funds to finish the job. Further, limited partners were suffering from the “denominator effect,” in which their public market accounts and real estate shrank in value, so their venture investments represented a higher percentage of wealth than they intended.
Around that timeframe, venture secondary sales started to require significant discounts, making secondaries a less appealing option for investors who could hold.
So Hurst teamed up with Peter Andes, Rob Freelen and Kaare Wagner to found and build Turbine Finance to provide margin line-style lending to LPs and GPs who wanted to continue investing in venture “without sourcing an endless stream of capital from outside sources.”
The Santa Monica, California-based firm’s goal is to provide venture capital and private equity firms with early liquidity options for their investors.
Turbine’s seed round closed in early 2023 and it publicly launched in April 2025 after receiving a $100 million warehouse credit line from Silicon Valley Bank.
To date, Turbine has underwritten approximately 60 funds, with more than 160 firms in the pipeline representing more than $500 billion in assets under management, according to Hurst.
Crunchbase News conducted an email interview with Hurst to learn more about Turbine’s business model and efforts. The interview has been edited for clarity and brevity.
Crunchbase News: Why do you think that LPs are looking for an alternative to secondaries?
Hurst: First, it’s important to understand that selling an LP stake to a secondary buyer isn’t as straightforward as listing shares on a secondary market like EquityZen or NYSE. Selling an LP position is much more complex.
As an LP in a venture fund, you don’t directly own shares in private companies; rather, you have partial ownership in a partnership that owns stock in 15-20 different companies, and the VC firm ultimately decides when to seek liquidity by selling these shares. Most of the time, the firm simply waits for portfolio companies to be acquired or go public to generate liquidity for its LPs.
In the event an LP would like to sell some or all of its position, the firm needs to be heavily involved in the transaction. In some cases, the firm reserves the right to deny the request altogether.
If the firm agrees to the sale, it typically makes the market to find a buyer, which ideally will be another existing LP. In nearly all cases, an early sale of an LP position will result in a heavy discount to today’s value.
Let’s say the LP understands all of these factors and requests a sale. While secondaries result in immediate liquidity, they can be extremely expensive, and the trade-offs can be significant:
- The seller gives up any future upside when they sell their stake.
- The position for single-company stock may clear at a 30%-60% discount to the company’s last valuation (except for elite startups, which command premiums), according to TheVentureCity’s Q2 2025 VC Benchmark Report.
- LP positions are likely to trade lower than single-company stock secondaries due to attached fee structures.
- The seller may be required to pay significant legal fees.
- Any gain on the sale may trigger a taxable event.
- Perhaps most consequentially, the seller is likely to lose their seat at the table for future fund vintages.
The bottom line: if your venture position is marked at 2.0x, you may be lucky to get your principal back in a secondary sale.
This feels a bit risky! How is the company mitigating the potential risk?
Actually, this debt is incredibly attractive relative to other credit products that banks and insurance companies are buying, such as credit card bonds and used-car debt.
A typical Turbine borrower is a family office with tens of millions in wealth spread across multiple asset classes. Our loans are relatively low LTV, but high impact, as they empower the borrower to activate leverage in a previously illiquid arena.
Why has borrowing against a fund position not historically been possible?
LPs have historically been unable to obtain a bank loan against an appreciated LP position in a venture fund for two big reasons.
First, the underlying fund investments in private companies are difficult to underwrite, even if all necessary data is readily available (spoiler alert: it isn’t).
Second, the venture firm would need to facilitate the loan and permit the LP to pledge his or her asset as collateral to the lender, which would typically be a large bank. VCs don’t have time to work with dozens of commercial banks on individual loan requests, and even if they did, banks aren’t built to properly value venture-backed private company stock.
Banks are built to lend against profitable, established businesses with cash flow to repay debt. Asking a bank to properly value 15 to 20 pre-profitable companies from a venture portfolio is a tall order.
VCs are not against LPs seeking credit backed by their positions, but they are against gigantic legal bills and heavy diligence from lenders designed to see less value in early-stage companies than they do as investors.
Turbine’s role is to partner with VC firms to properly value their investments, to originate credit against the value of these positions, and to then place this debt with banks, insurance companies, and asset managers that compete to house it.
How can early liquidity solutions help in the current fundraising environment?
More companies are opting to stay private longer, and exit times are lengthening.
Companies that went public in 2025 were a median age of 13 years old, up from a median age of 10 years in 2018, per Renaissance Capital. Some are taking even longer to go public; for instance, should SpaceX reach IPO in 2026, it will be 24 years old. The lack of significant returns from company exits means fewer dollars for LPs to recycle into new funds.
In the absence of earlier company exits, the market needs other solutions to bridge the gap. Credit has a clear role to play in empowering investors to recycle capital, invest in each vintage, retain their seat at the table, and ultimately realize the full upside of their investments without becoming overallocated to the asset class.
When are fund managers most likely to explore liquidity options for LPs?
VCs are working hard to generate liquidity the old-fashioned way, via company sales and IPOs. However, companies have strong options available to stay private longer (if not forever), and the IPO hurdle is higher than ever before. If firms intend to continue raising new funds every three years, they need to provide their LPs with tools to bridge the liquidity gap.
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Illustration: Dom Guzman
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