VC Interest Sets Symmetry Apart

Larry Wonnacott and Marshall Greenwald have been investing in private equity since the late 1980s. They started working together in Kemper Financial Services. Several acquisitions later, they left Deutsche Bank Asset Management in early 2003 and formed Symmetry Investment Advisors.

The Chicago-based firm provides strategic private equity advisory services to institutional investors. Like other strategic advisors, the firm decided it could fill a niche in the secondary market and raised $70 million for the Symmetry Secondary Fund 2004. Limited partners include funds-of-funds that Wonnacott describes as “more enlightened gatekeeper entities,” as well as other institutional investors.

Unlike most groups raising a secondary fund, the principals of Symmetry found their deal first and then raised their money. The fund has already been used to purchase the private equity portfolio of a financial services firm. The seller was a group with which Greenwald and Wonnacott had a previous working relationship.

The portfolio is a mix of buyout, mezzanine and venture capital partnerships. While most of the capital in the fund is invested in buyout deals, more of the partnerships in the portfolio are venture capital partnerships.

Symmetry’s willingness to take on VC assets sets it apart from many other secondary buyers, who have recoiled from venture assets during the last few years. “The majority of partnerships were venture partnerships, and most of the secondary funds are not interested in a venture portfolio,” says Wonnacott. “That’s one reason the seller worked with us: We’re comfortable with venture capital and buying secondary in venture capital.”

He says that despite some renewed interest on the part of firms like Credit Suisse First Boston and others, the secondary bias toward buyout funds will likely continue. “Everybody wants the big dollars and easy evaluations, and those are in buyouts. It’s much easier to value a company with positive cash flow than it is to spot the value in a startup. That’s why the bias is there and why the bias will stay there,” he says.