Mark Zuckerberg And Jack Dorsey-Backed Investment Group Shifts Focus Amid IPO Drought, Explores M&A And Secondary Markets With $5.75B Venture Fund

Iconiq Capital, an investment group supported by Meta Platforms Inc. CEO Mark Zuckerberg and Twitter founder Jack Dorsey, is exploring alternative methods to generate returns from its largest-ever venture fund due to a lack of initial public offerings.

What Happened: The San Francisco-based firm recently closed a $5.75 billion fund through its venture arm, Iconiq Growth, surpassing its previous $4.1 billion fund raised in 2021. Partner Matthew Jacobson told the Financial Times that the fund would adapt to the downturn in public markets, which has resulted in fewer start-ups seeking IPOs.

Jacobson noted that historically, most of Iconiq’s value came from public markets, with around 30 IPOs in the past 11 years. However, no new companies have gone public since 2021. The firm is now focusing on mergers and acquisitions and the secondary market for start-up stocks.

"We're seeing a lot of early shareholders looking for liquidity and it creates opportunity in the market," said Jacobson.

Iconiq’s shift mirrors broader trends in the venture capital industry, where investment into start-ups has significantly declined. Last month, Iconiq portfolio company QGenda agreed to sell to Hearst for over $2 billion. Additionally, Iconiq is leveraging the growing trade in start-up secondaries to release capital.

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Why It Matters: The venture capital landscape has seen significant shifts, especially with the decline in IPOs. This has forced firms like Iconiq to explore new strategies.

Jacobson highlighted that the boom in artificial intelligence has attracted investors, though Iconiq avoids capital-intensive AI model developers. Instead, it invests in AI application start-ups like Glean, Writer, Evolution IQ, and DeepL.

Iconiq Growth is also expanding its presence in Europe, backing companies like Adyen and Miro, with a focus on AI hubs in Paris and London. Partner Seth Pierrepont emphasized the supportive role of European governments in fostering AI innovation, according to the report.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote