Opportunities in private markets

Steven Williams, Head of UK Distribution at GAM Investments, discusses opportunities in private markets with Kevin Moss, Managing Director at Liberty Street Advisors. They cover a broad range of topics including Kevin’s career, his most and least successful investments, avoiding ‘binary’ sectors and how he and the team source deals.

20 March 2025

Steven Williams: Kevin, should we start by talking a little bit about your career? How did you get started in finance?

Kevin Moss: Well, as a young man, I thought I wanted to do finance, but it wasn't until I went to business school at Columbia in New York, where that's pretty much what you're going there for. And so when I graduated from Columbia, I entered into trading, and I've been there for the last 30 years.

SW: How did you build your career in finance, and particularly in private equity (PE)?

KM: Well, in the beginning, it was primarily equities. That's how I entered into managing a P&L. And that eventually evolved into private equity, which then evolved into this strategy. And so this strategy that we've been involved in, which is late stage venture, I've been doing that for about a third of my career.

SW: And you’re now based on the West Coast of the US. Has that always been the case?

KM: No. I was born in New Jersey on the East Coast. I spent about 15 years in New York City. I spent about three years in London. And then it wasn't until 2009 that I moved to the West Coast.

SW: So how did you meet Christian Munafo?

KM: Christian, we were looking for a chief investment officer for the strategy, which was about six or seven years old. This is the US flagship strategy that we manage. And we needed a chief investment officer. We hired a search company. We looked at about 30 different candidates before we finally settled on Christian. He ticked all the boxes that we were looking for. And it's been a great partnership.

SW: How come you moved the strategy to Liberty Street?

KM: The strategy originally was at a company called SharesPost. SharesPost had a platform that facilitated transactions in late stage venture. So it was a great place to start a strategy like this, but a very difficult place to actually distribute 40 Act funds*. So we started looking for a new home where we were looking for somebody who had the experience in distributing 40 Act funds. And Liberty Street was a really good fit for us. So we ended up moving back in December of 2020.

SW: And looking at all the investments you've made, is there one that stands out as perhaps being the best?

KM: Well, of course, we love all of our investments. Everyone has a story. I would say there's a couple that really stand out, but maybe one is a company called Marqeta. It's a payment company. During Covid, a lot of different sectors had inflated valuations, and Marqeta was no exception. We bought that company around USD 2. It went all the way up to USD 13. We sold some. It went all the way up to USD 40. We sold some more. Eventually, it went public, and we sold the balance of the shares in the mid-20s. That was a good investment.

SW: Sounds it. And I suppose you know what's coming next. What would you say has been your worst or most disappointing investment?

KM: Well, I'm going to stick to what the worst investment was in this particular strategy, because I have a 30-year career, and there's been lots of ups and downs. But in this strategy, the worst investment was probably a company called Sungevity, which was a solar company. Back in 2016, when Trump became president, everybody thought he was going to be going after clean technology. And solar companies are capital-intensive businesses that rely on lines of credit to fund their operations. And so those lines of credit got cut off. So the majority of solar companies that were relying on those lines of credit went bankrupt. And that's what happened with Sungevity. It was a meaningful position for us. So that was a tough loss.

SW: Did you learn much from that process that you were able to apply to other investments?

KM: Yeah. Don't invest in capital-intensive businesses that rely on lines of credit. Proceed with caution. Any time companies have big cash burns, it's a capital-intensive business.

SW: So focusing more on the strategy that you run, are there some core themes and sectors to that you've pivoted the portfolio towards?

KM: Well, the portfolio is sector agnostic. We believe technologies transcend all sectors. So we're really just looking for innovative companies that are disrupting sectors. But what we won't do are sectors that are binary in nature, like biotechnology or deep science. We stay away from those sectors. Well, part of our strategy is that we want to have a very diversified portfolio. So not only in the number of names. So by names, we're very diversified. We're also diversified by sectors, anywhere between 15 to 20 sectors. And by vintages. It's an evergreen strategy. So we're deploying capital year after year after year.

SW: And to that point, what's the liquidity profile?

KM: We have a very liquid strategy. So every quarter, we allow 5% at a fund level for liquidity. So that may not seem like a very liquid strategy. But when you're looking at private equity or venture, which have 10 to 15-year lockups, it's actually very liquid.

SW: So how quickly is the capital deployed?

KM: Well, you have to remember, this is not public equity, which settles T+1. This is private equity. And a private transaction settles anywhere between 30 to 60 days. That being said, we have anywhere between five to 10 transactions in process. So as the capital is coming in, we always have deals to deploy capital pretty quickly.

SW: What are the differences in expectations around the returns profile in private markets compared to those in the public sphere?

KM: Obviously, during a certain period of time, one is going to outperform the other. But in the long run, and typically we'll look somewhere between 10 to 15 years, you'll find that private equity does outperform public equity.

SW: How does the pipeline for deals and the opportunity set in terms of your investable universe look?

KM: The investable universe looks great. We see about USD 10 billion deal flow a year. Now, keep in mind that 50% of that is not compelling. But we have to review that. I think my team reviews that pretty thoroughly. About USD 3 billion of that deal flow is pretty good deal flow. And then USD 2 billion of that deal flow is extremely compelling. So we have a lot of deal flow. The pipeline looks great right now.

SW: Sometimes people have been concerned that there's too much money chasing too few opportunities. Do you think that's fair?

KM: That is fair. It depends on what market you're in. Back in 2020 and 2021, there's no question there was a much higher supply of demand than there was supply. That has changed dramatically in 2022 and 2023. So the supply-demand completely flipped during this period of time. Right now, there's an oversupply of deal flow and sellers, and there's a lack of demand. So if you do have capital to deploy at this point, there's some really great opportunities.

SW: So how do you source the deals that go into the portfolio?

KM: Well, we do two different types of transactions: secondary transactions and primary transactions. So we have a strong network in the venture capital ecosystem. So we will get invited to primary transactions through our friendly VCs, as well as the fact that we have 85 companies in our portfolio. So when companies are doing rounds of transactions, primary rounds, we will get invited to those rounds. We also have a good network with the banker community. So the Goldmans, Stanleys, JP Morgans that are raising capital for these companies, we'll get an invitation from them as well. When we're doing secondary transactions, we know the brokers extremely well too. They all know what we do is buy private transactions. So the broker community will also be seeing a ton of deal flow from them throughout the year.

SW: And lastly, what would you say that you and Liberty Street Advisors have in terms of edge over the competition and your peers?

KM: Well, we're passive investors. So we're not taking board seats, which means we're not competing with our VC friends. And also, we're providing liquidity for our portfolio companies. The fact that companies are staying private longer, they now have an HR issue. They have a lot of employees in the company that are paper rich, cash poor. And so they need liquidity to help out these employees. And we'll provide that liquidity, usually at very compelling prices.

SW: Well, Kevin, thank you very much for taking the time to speak to me and for coming over to London this week.

KM: Thanks for having me. Thank you.

Kevin Moss, Managing Director of Liberty Street Advisors, Inc., manages the Private Shares strategy for GAM Investments.

You can find out more about Liberty Street Advisors, private markets and late-stage venture capital opportunities here.