Good day. Venture secondary deals have gone from a distress signal to a common exit strategy. This has eased the liquidity crunch for VCs, but an influx of retail investors and special-purpose vehicles has also inflated prices, shrinking the original value proposition for buyers in secondary markets.

“As FOMO comes in, people start to chase and the secondary market heats up,” Larry Aschebrook, founder and managing partner at venture firm G Squared, said in a panel discussion last week on secondary markets led by PitchBook.

The influx of cash and the hype around hot startup shares have reversed the original value proposition of secondaries that exchanges a discount for an illiquid asset. 

“The rank-and-file kind of secondaries for us is looking for that illiquidity discount,” he said. “You want to get real value.” Aschebrook says his firm often targets discounts between 20% and 30% off what he called “intrinsic value.”

With several highly anticipated IPOs on the horizon, including OpenAI, Anthropic and SpaceX, secondary platforms are about to be cleared of several of their highest-priced assets. While new favorites will likely emerge, Aschebrook says a less-hyped secondary market could lead to increased discounts on shares and more upside for investors.

Discounts on secondaries reflect the relative illiquidity of the asset. Matt Lawson, the chief marketing officer at the secondary platform Hiive, says buyers on the platform often require a discount in exchange for investing in a stock they are unable to convert into cash.

With retail investors and SPVs looking to capitalize on forthcoming IPOs, rising liquidity has chipped away at these discounts. While this dynamic is true among the 20 most active names—where 80% of secondary volume takes place—Lawson says that value-based deals still exist.

“When investors ask for greater illiquidity discounts, they are simply looking in the wrong place,” he said. “That discount exists today in dozens of stocks on our platform that are not among the 20 most liquid.”

Those include names like software development platform Replit, which has traded at prices lower than its last venture round on Hiive, according to data from the platform.

Replit, which raised a Series D round in March that carried a $9 billion post-money valuation, said a forthcoming employee tender offer is garnering demand that would price the company at or above that watermark.

“These are solid companies,” Lawson said, “so it’s unlikely the underlying business fundamentals changed.”

For secondary buyers who can hold through a period of uncertainty, these less-hyped stocks can provide profit both from business growth and higher long-term prices. That’s exactly where Aschebrook says his firm will look for value in the run-up to major IPOs.

“Our mentality has always been, as people are rushing to buy, we take a perspective of selling,” he said.

And now on to the news...

Venture roll-up. In private equity, a roll-up has historically meant buying companies, consolidating them to achieve an economy of scale and then flipping the larger entity for profit. The venture-backed startup Beacon Software has a twist on this strategy: an AI conglomerate.

• Beacon is a holding company that acquires software companies, injects them with artificial intelligence and rolls them up into a portfolio to hold indefinitely. The strategy, sometimes called an AI-enabled roll-up, is increasingly popular in venture capital.
   
• Beacon Software has raised a $225 million Series C round, funding that it will use to make acquisitions and improve the AI operating system it provides its portfolio companies. General Catalyst and HarbourVest led the round.

A federal judge on Monday invalidated the Trump administration’s new fees for H-1B visas, saying officials overreached in applying a $100,000 charge for new applicants to the popular program for foreign professionals. U.S. Judge Leo Sorokin in Massachusetts declared the fee unlawful, siding with a coalition of states that challenged the policy and argued it hurt their ability to staff publicly run colleges and universities, primary and secondary schools, and healthcare systems. 

OpenAI confidentially filed IPO paperwork with the Securities and Exchange Commission, the startup said in a written statement. The filing sets up the company to potentially go public as soon as this fall, though OpenAI said it hasn’t yet decided on timing. OpenAI said in a written statement on Monday that “it may be a while” until it goes public because there are “things we want to do that are likely easier as a private company.” 

People

Cybersecurity startup Armadin appointed Barbara Massa as chief operating officer. She most recently served as senior partner and COO at NightDragon.

IPOs

Bending Spoons, which owns AOL, Eventbrite, Vimeo, Evernote and Remini, has filed for an initial public offering, according to Dow Jones Newswires. The Italy-based company said it has applied to list its shares on the Nasdaq Global Select Market under the symbol BSP.

Ramp, a New York-based expense-management platform, scored a $750 million investment led by Iconiq, GIC and Ontario Teachers’ Pension Plan, valuing the company at $44 billion. New investors including Goldman Sachs Alternatives and Morgan Stanley Investment Management also participated.

Supabase, a San Francisco-based startup that builds backend tools for software development, raised a $500 million Series F round at a post-money valuation of $10.5 billion. GIC led the round, which included participation from Felicis, Accel, Y Combinator, Craft, Coatue and others. The round brings Supabase's total funding raised to more than $1 billion.

Generalist, a San Mateo, Calif.-based commercial robot intelligence startup, picked up $400 million in new funding at a $2 billion valuation. Radical Ventures led the investment, which included contributions from 8VC, Union Square Ventures, Norwest, Boldstart Ventures, Spark Capital and Bezos Expeditions.

NinjaOne, an Austin-based IT operations platform, secured more than $400 million in Series C extension funding from investors including Sequoia Capital, Iconiq and New Enterprise Associates. The latest investment brings the company’s valuation up to $12.3 billion.

Honeycomb Insurance, a Chicago-based digital insurer specializing in apartment buildings and condo associations, snagged a $40 million investment led by Zeev Ventures.

A Security, a New York-based autonomous offensive security startup, emerged from stealth with $37 million in funding from investors including Lightspeed Venture Partners, Cyberstarts and Cerca Partners.

Lassie, a San Francisco-based startup building autonomous systems to run small businesses, nabbed $35 million in Series A funding. Andreessen Horowitz led the investment, with General Partner Alex Rampell joining the company’s board.

EDGE Markets, a New York-based startup creating products for alternative financial markets in the gaming, crypto and prediction markets space, closed a $29.2 million Series A round led by CoinFund.

Earlytrade, a Denver-based platform providing working capital management for the construction industry, has raised $25 million in funding, including a Series A round led by S3 Ventures and Brick & Mortar Ventures.

Lexful, an IT documentation platform built for managed services providers, completed a $7 million seed round led by Top Down Ventures and York IE. 

Willow, an Israel-headquartered identity and access platform for enterprise AI agents, was seeded with a $7 million investment led by Hetz Ventures.

Zaro.ai, a London-based platform that replaces fragmented AI tooling with a single adaptive workspace, emerged from stealth with $5.1 million in pre-seed financing. Cherry Ventures led the investment, which saw participation from Flourish Ventures.

• Apple Unveiled the New Siri AI. Here Are the Key Takeaways.

• The 24-Year-Old AI Wiz Who Counts Jane Street as an Investor

• Chinese AI Startup StepFun Set to File for Hong Kong IPO

• Democrats Unveil Flood of AI Proposals in Potential Challenge to Tech Giants

• Nvidia Strikes Deals With Korean Tech Titans for AI Infrastructure Buildout

• FTX Co-Founder Sam Bankman-Fried Formally Seeks Presidential Pardon

• Driverless Trucks Are Here—and They’re Delivering Bags of Doritos

This newsletter was compiled by Matthew Strozier and Zachary Cole.

Share your tips, comments and questions: vcnews@wsj.com

The team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Sarah Klearman.

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