Venture capital investors have long battled a major pain point: their money gets stuck. With IPOs slowing to a crawl in recent years, limited partners (LPs) — especially wealthy individuals and small family offices — have struggled to access liquidity from their VC fund commitments.
Entrepreneur Mike Hurst experienced that cash crunch firsthand. After selling his fintech startup Exactuals to City National Bank in 2018, he poured much of the proceeds into tech stocks and venture capital funds. But when tech stocks nosedived in 2022, his ability to meet capital calls from VC firms dried up.
That dilemma inspired Hurst to launch Turbine, a startup offering credit lines secured by an investor’s stake in venture funds — without forcing them to sell their positions.
A New Credit Solution for Venture Capital Investors
Turbine officially launched on Friday, emerging from stealth with $22 million in equity funding and up to $100 million in debt from Silicon Valley Bank to back its lending.
The equity round was co-led by Alpha Edison and TTV Capital, with participation from Fin Capital, B Capital, and Sozo Ventures. These backers are also Turbine’s first customers, already offering the platform’s credit product to their own limited partners.
The concept is simple yet powerful: Turbine enables LPs to borrow cash using the appreciated value of their fund stake as collateral. Think of it like a home equity line of credit, but backed by a VC investment instead of real estate.
Why This Matters: A Better Option Than Selling at a Loss
Before Turbine, LPs had limited choices when they needed liquidity. One option was to sell their fund interest on the secondary market — but that usually meant taking a steep discount. Another was for the VC firm to offload some portfolio company stock, which could harm the fund’s long-term strategy just to help one investor.
“LPs would approach me needing liquidity,” said Gardiner Garrard, co-founder and managing partner at TTV Capital. “But none of the solutions really worked well for a single investor.”
Turbine solves that by offering loans based on the current marked-up value of an LP’s investment. So if an investor originally put $3 million into a fund and it’s now worth $10 million, Turbine lets them borrow against the $10 million valuation — without giving up future returns.
Loans Aren’t Cheap — But Still Better Than Losing Upside
Of course, there’s a catch: interest rates are high. Turbine’s credit lines currently carry a rate around 9%, above the 7.5% prime rate. But that’s still cheaper than selling LP interests at a discount or taking out a margin loan against volatile public stocks.
“This is a very reasonable rate,” Garrard argued, “especially when you consider how much value you’d lose trying to sell your stake on the secondary market.”
For investors seeking liquidity without sacrificing upside, it could be a game-changer.
Early Support from VC Firms and What’s Next
All five VC firms that backed Turbine’s funding round are already rolling out the platform to their own investors. And Hurst plans to make the credit product available to even more venture funds soon.
Garrard summed up the sentiment many investors now share: “I couldn’t believe we didn’t have something like this for our LPs before.”
With Turbine stepping in to fill the liquidity gap, limited partners may finally gain a flexible way to tap cash — without abandoning their long-term bets.
