In the fourth quarter of 2018, the SharesPost Private Growth Index, which tracks valuations for 106 private growth firms, increased by 10.9 percent to 168.18 from 152.47 from the previous quarter. By comparison, the S&P 500 was down 14.3 percent and the Dow Jones U.S. Technology Index was down 17.9 percent during the same period. Private asset growth significantly outperformed public indexes in Q4 2018 as December represented one of the worst months in recent history for major public indices.
Since its launch on January 1st, 2017, the SharesPost Index has increased 68.18% percent through December 31, 2018. By comparison, S&P 500 has increased 11.97 percent whereas the Dow Jones U.S. Technology Index has increased 32.87 percent during the same period.
For the current year 2018, the SharesPost Index has increased 41.9 percent from January 1, 2018 to December 31, 2018. By comparison, both S&P 500 and Dow Jones U.S. Technology Index decreased by 6.2 percent and 1.9 percent, respectively.
On a cumulative basis, from January 1, 2015 to June 30, 2018, the SharesPost index increased approximately 188.1 percent; the S&P 500 rose 21.8 percent and the Dow Jones index increased 53.4 percent.
The cumulative implied valuation of the 106 private growth companies included in the Index has increased from $374 billion as of previous quarter to $389 billion at the end of fourth quarter of 2018. The median implied valuation of the 106 companies included in the Index has risen from $1.23 billion to $1.38 billion during the 4th quarter of 2018.
Public markets softened and became more volatile in Q4 of 2018. December was one of the worst months in recent history for S&P 500. Yet, IPO outlook for 2019 remains bright.
The key events affecting the Index performance during the second quarter of 2018 were:
(+) Upside drivers: Primary funding rounds during this period included, Instacart (Series F), Chargepoint (Series H), Coinbase(Series E), Auris Health (Series D-1), Netskope (Series F), InVision (Series F) and Snowflake(Series F).
On average, the valuation of the companies that completed a primary funding round during Q4:2018 increased by 148 percent.
There were two Initial Public Offerings (IPOs) during Q4:2018: Guardant Health (NAS:GH) and Anaplan (NYS:PLAN).
(-) Downside drivers: We did not track any notable down round funding’s during Q4:2018.
Among the index companies, there have been a total of 14 exits YTD through December 31, 2018 either via an IPO or M&A, averaging at about 1.16 exits per month.
As of Feb 28, 2019, our preliminary data indicates that the Index has increased 11 percent compared to 4.2 percent increase in the S&P 500 and a 12.4 percent increase in the Dow Jones U.S. Technology Index for YTD 2018. Key contributors to performance include companies that completed primary funding rounds i.e. Postmates (Series F), SpaceX (Series J), DoorDash (Series F), Illumio (Series E), Databricks (Series E), Rubrik (Series E), Reddit (Series D), Desktop Metal (Series E).
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Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.
Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.
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