Limited partners in venture capital funds have faced a major problem in recent years: a lack of liquidity. This issue has been particularly challenging for individuals with substantial investments in VC funds, such as entrepreneur Mike Hurst.

After selling his payments startup Exactuals in 2018, Hurst invested a significant portion of the proceeds in tech stocks and venture funds. However, when the tech stocks took a hit in 2022, he found himself short on cash to support his commitments to VC funds. This experience led Hurst to create Turbine, a debt platform that allows limited partners to borrow funds secured by their LP position in venture funds.

Turbine recently emerged from stealth mode and announced that it has raised $22 million in equity funding. The company has also secured up to $100 million in debt from Silicon Valley Bank to support its loan making. Turbine provides a solution for limited partners to access funds using their fund stakes as collateral, similar to how a home equity line of credit uses home value.

Gardiner Garrard, a co-founder and managing partner at TTV Capital, expressed excitement about Turbine’s ability to provide liquidity to LPs. He highlighted the challenges LPs face when seeking cash and the limited options available to them, such as selling assets at a loss or accepting discounts on their stakes.

Turbine offers investors the opportunity to leverage the appreciated value of their venture fund positions without sacrificing future upside. While the interest rate on these loans is around 9%, Garrard believes it is a reasonable rate compared to the costs of selling stakes at a discount.

The company’s initial customers are venture firms that participated in its equity raise, with plans to expand its product to more VC funds in the future. Turbine’s innovative approach to providing liquidity to limited partners is welcomed by industry insiders, who see it as a valuable solution to a longstanding problem.