Covid-19 has had a big impact on the venture capital business, with fund raising becoming harder and valuations coming down. One player that has taken advantage of these developments is Paul Hudson’s Glade Brook Capital Management.
The fund, which has ties to Tiger Management, has made four investments since the global pandemic began wreaking havoc on markets, taking advantage of lower valuations. Meanwhile, it is trying to raise the remaining one-third of its targeted $200 million in the second round of fundraising for its new private growth fund, Glade Brook Strategic Growth II.
Glade Brook declined to comment.
Hudson, who previously worked for Tiger Cub Chris Shumway, founded Greenwich, Connecticut–based Glade Brook in 2011. It started off as a hedge fund firm, but about six years ago it morphed into a venture capital and private equity firm.
The firm began raising money for Glade Brook Strategic Growth II LP in the second half of 2019, when it pulled in more than half of the capital it was seeking. It is planning to close the fund at the end of October, according to an investor in the fund.
The Strategic funds are designed to have $200 million in capital, according to an investor. They then deploy the capital over a two to three-year period.
The fund made its first two investments early — before Covid-19 appeared to be a major crisis — and has four investments since Covid-19 was deemed a pandemic.
Early this year, for example, it led a funding round for online media company Axios. It also led the $36 million Series B+ financing round in Fenbeitong, a corporate expense management start-up in China, according to a press release. A Glade Brook investor described Fenbeitong as a bullet train that is growing very quickly.
Since the pandemic rocked the markets, Glade Brook has made four more investments. It invested in Airbnb’s first lien senior-secured bank debt as part of a $1 billion fundraise for the home-sharing company. Airbnb had been hoping to go public before the pandemic hit.
According to an investor, Airbnb is paying investors about 10 percent a year in a cash yield. It is priced at a discount to par and callable, which investors expect the company to do in two years at a premium to par. An investor sees this deal producing a mid-teens annual return. Glade Brook was an early investor in Airbnb’s equity but sold its position last year, according to an investor.
The investment firm also recently invested in the $260 million term loan recently issued by William Morris Endeavor Entertainment.
In addition, Glade Brook made a new equity investment in Patreon, an online platform for creative talent. In 2019 Glade Brook led the company’s $60 million Series D financing.
The fourth company that Glade Brook recently invested in is described by an investor as a software company that serves manufacturing and industrial companies.
