E260: How Founders Access Liquidity in Pre-IPO Companies

In this episode of How I Invest, David Weisburd interviews Philip Benjamin of Colson Equity Financing. Philip discusses his background in a fourth-generation real estate family and how selling a real estate portfolio before the 2008 financial crisis allowed his family to diversify into other investments. He explains the evolution from investing in fund managers to direct investments, ultimately leading to the creation of Colson. Philip describes Colson's strategy of providing equity financing to founders and executives of late-stage venture growth companies, offering liquidity without forcing them to sell shares at depressed valuations. He highlights the benefits for both investors, who gain access to companies at discounted valuations with downside protection, and for founders/executives, who can unlock liquidity and optimize their tax situations. Philip also shares lessons learned from Fund 1, emphasizing the importance of structural alpha, stickiness within companies, access to deals, and synergistic relationships with other professionals in the venture space. He addresses why this type of pre-exit liquidity solution hasn't grown as much as one might expect, and expresses his view on the importance of diversification and relationship building for success in the venture capital world.