In a recent fireside chat, Olav Ostin, Founder and Managing Partner at TempoCap, shared his expert insights on the evolving trends in the secondary market, with a focus on technology. Hosted by Giovanni Amodeo, the discussion covered a range of topics from sector-specific strategies to the impact of AI on investment decisions.

Background and TempoCap’s Journey: Olav Ostin began by recounting his transition from DFJ Esprit to founding TempoCap in 2016. Over the past eight years, TempoCap has specialized in secondary technology investments, primarily in Europe, focusing on sectors like cybersecurity, fintech, and enterprise software.

Sector-Specific Focus and AI Influence: Ostin emphasized the importance of a sector-specific approach to deliver strong returns. He highlighted the growing influence of AI, particularly large language models (LLMs), in accelerating technology adoption and displacing older technologies. This trend is crucial for understanding potential shifts in customer adoption and the viability of investments.

Investment Strategy and AI’s Impact: Discussing the impact of AI on portfolios, Ostin noted that AI tools are beginning to replace major software solutions, posing both opportunities and threats. He stressed the need for careful evaluation of AI’s potential to disrupt existing technologies and the importance of avoiding investments in companies vulnerable to such disruptions.

Deal Flow and Market Dynamics: Ostin revealed that deal flow has significantly increased, driven by corporate VCs seeking liquidity and a challenging fundraising environment. He noted that the quality of underlying assets has improved, with companies now focusing on profitability rather than aggressive growth.

First Mover vs. Follower Strategy: TempoCap adopts a cautious approach, preferring to observe market developments before making investments. This strategy aligns with their goal of delivering quick DPI (Distributions to Paid-In Capital) and maintaining a low-risk profile.

Differences Between US and European Markets: Ostin highlighted key differences between US and European markets, particularly in valuation practices and investment strategies. US investors are more aggressive in adjusting valuations and triaging portfolios, while European investors tend to be more loyal to their investments.

Future Outlook and Exit Strategies: Looking ahead, Ostin is optimistic about the potential for increased exits in the coming years, driven by improved market conditions and a resurgence in IPO activity. He believes that the current environment presents a unique opportunity for investing in high-quality assets at attractive valuations.

Conclusion: The fireside chat with Olav Ostin provided valuable insights into the secondary market’s future, emphasizing the critical role of technology and AI. TempoCap’s strategic approach and sector-specific focus position them well to navigate the evolving landscape and capitalize on emerging opportunities.

Key Timestamps:

00:09 Introduction to the Fireside Chats
01:23 Sector-Specific Focus in Technology Investments
02:44 Impact of AI on Private Equity Portfolios
04:53 Investment Strategy: First Mover vs. Follower
06:15 Deal Flow Trends in the Current Market
08:21 Quality of Assets in a Changing Market
09:49 The Perspective on Selling Portfolio Assets
12:14 Comparing European and US VC Strategies
16:03 Differences in Risk Attitudes Between VCs
19:00 Evaluating Technology Investments
20:36 Successful Exits in Cybersecurity
21:16 Understanding the US Market Landscape
23:02 Future Outlook on Exits and IPOs
24:36 The Role of IPOs in Exit Strategies
26:02 Investment Strategies and Market Predictions