Survey Report

Taking Stock in Private Tech – Mid-Year Investor Survey Recap

Bull-Bear Gap Widens, Favoring Private Tech Companies As Most Investors Anticipate a Continuing Rise in Valuations

The results of SharesPost’s mid-year investor sentiment survey are in, and they confirm what our year-end 2016 sentiment survey projected: Investors of all types remain predominantly bullish about the prospects for private tech companies in 2017. In fact, at mid-year, we observed a marginally higher level of positive investor sentiment than we did in December 2016. Investors continue to prefer private tech shares (along with public small-cap stocks) and expect 2017 to be a prolific year for unicorn creation. In terms of sectors, investors continue to like big data, security, VR/AR, and fin-tech, and they increasingly believe that buying and selling private shares on the secondary market is an attractive investment opportunity.

Our mid-year findings come from over 325 accredited individual and institutional tech investors, who let us know their expectations for the rest of the year. Survey participants represented a wide range of private- and public-market investment styles. Although all such surveys have a degree of sampling bias, the results of this survey were surprisingly consistent.

Top 5 highlights include:

  1. Investors are more bullish about prospects for private tech company valuations. 68 percent of surveyed investors think private company valuations will increase over the next 12 months, while 15 percent believe valuations of private tech companies will decrease over the same time period. This is a demonstrably more bullish response than the one we heard at the end of 2016, when only 49 percent of surveyed investors believed that valuations would rise during 2017, and 28 percent believed valuations would fall. The bull-bear gap for private tech companies has widened over the past six months when compared to the corresponding gap for public market performance expectations. Clearly, on the margin, investors are more positive about the prospects of private tech companies over the next 12 months than they are about publicly traded shares.
  2. Investors continue to prefer small-cap or early-stage companies. We asked survey respondents about their preferences for public large-cap tech, private large-cap tech, public small-/mid-cap tech, private small-/mid-cap tech, and early/seed investments. 71 percent of the surveyed investors chose small companies: either private or public small-/mid-cap companies or early-stage companies. These findings largely aligned with the roughly 73 percent of survey respondents who indicated a preference for smaller companies. Interestingly, we observed a stronger bias among institutional investors toward the small-/mid-cap asset classes.
    “Thinking about your investments over the next 12 months, which of the following asset classes do you believe are likely to deliver the best returns?”
    Exhibit 5: “Thinking about your investments over the next 12 months, which of the following asset classes do you believe are likely to deliver the best returns?”
    Source: SharesPost Research; for 2017 mid-year survey, N=325 survey respondents; for 2016 year-end survey, N=600 survey respondents

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Disclaimer

SharesPost, Inc., is an affiliate of SharesPost Financial Corporation, SP Investments Management, LLC, and the SharesPost 100 Fund. SharesPost Financial Corporation is a member of FINRA/SIPC. SP Investments Management, LLC is an investment adviser registered with the Securities and Exchange Commission.

SharesPost Financial Corporation does or intends to seek to do business with the issuer or issuers covered in this report. Accordingly, certain conflicts of interest may exist that could affect the objectivity of this report.

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about any and all of the subject securities or issuers and that no part of such analyst(s) compensation was, is, or will be, directly or indirectly, related to the specific views contained in this report.

Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the grown and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

This report does not contain a complete analysis of every material fact regarding any issuer, industry or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable, however, we cannot guarantee the accuracy of all such information.

None of the information contained in this report represents an offer to buy or sell or a solicitation of an offer to buy or sell any security, nor does it constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation, do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax or transactional advisory services.

Any securities offered are offered by SharesPost Financial Corporation. SharesPost Financial Corporation and SP Investments Management, LLC are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk and should only be considered a long-term investment. You must 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. You are responsible for verifying the accuracy of the data received. Each investment also carries its own specific risks and because you must make your own independent decisions regarding any securities or financial instruments mentioned herein, you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other 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.

SharesPost, My SharesPost, SharesPost Index, SharesPost Investment Management, SharesPost 100 Fund, and SharesPost 100 List are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright © SharesPost, Inc. 2017. All rights reserved.

Contact

For information on research and analysis

Rohit Kulkarni
Managing Director
Private Investment Research Group
(650) 273-7905Email

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Disclaimer

SharesPost, Inc., is an affiliate of SharesPost Financial Corporation, SP Investments Management, LLC, and the SharesPost 100 Fund. SharesPost Financial Corporation is a member of FINRA/SIPC. SP Investments Management, LLC is an investment adviser registered with the Securities and Exchange Commission.

SharesPost Financial Corporation does or intends to seek to do business with the issuer or issuers covered in this report. Accordingly, certain conflicts of interest may exist that could affect the objectivity of this report.

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about any and all of the subject securities or issuers and that no part of such analyst(s) compensation was, is, or will be, directly or indirectly, related to the specific views contained in this report.

Analyst compensation is based upon various factors, including the overall performance of SharesPost, Inc. and its subsidiaries, and the performance and productivity of such analyst including feedback from clients of SharesPost Financial Corporation and other stakeholders in our ecosystem, the quality of such analyst’s research and the analyst’s contribution to the grown and development of our overall research effort. Analyst compensation is derived from all revenue sources of SharesPost, Inc., including brokerage sales.

This report does not contain a complete analysis of every material fact regarding any issuer, industry or security. The opinions expressed in this report reflect our judgment at this date and are subject to change. The information contained in this report has been obtained from sources we consider to be reliable, however, we cannot guarantee the accuracy of all such information.

None of the information contained in this report represents an offer to buy or sell or a solicitation of an offer to buy or sell any security, nor does it constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation, do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax or transactional advisory services.

Any securities offered are offered by SharesPost Financial Corporation. SharesPost Financial Corporation and SP Investments Management, LLC are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk and should only be considered a long-term investment. You must 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. You are responsible for verifying the accuracy of the data received. Each investment also carries its own specific risks and because you must make your own independent decisions regarding any securities or financial instruments mentioned herein, you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other 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.

SharesPost, My SharesPost, SharesPost Index, SharesPost Investment Management, SharesPost 100 Fund, and SharesPost 100 List are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright © SharesPost, Inc. 2017. All rights reserved.

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