2018 Year-End Investor Survey: Investors still bullish about private tech
January 22, 2019

2018 Year-End Investor Survey: Investors still bullish about private tech

Executive Summary

We are pleased to announce the results of our third annual SharesPost private tech investor sentiment survey. Despite recent volatility in the public markets, investors remain bullish about investing in private technology companies in 2019. Additionally, our predictions from 2017 were largely accurate with regard to private company activities, though a bearish Q4 wiped out the gains achieved throughout the year, contradicting our estimation of a gain on the year.

For our 2018 survey, we received over 530 responses from accredited individuals and institutional investors, a group that represented a wide range of private and public investment styles. Although such surveys admittedly have a degree of sampling bias, the results were consistent with our 2016 and 2017 survey results.

Key highlights from the survey include:

Investors remain bullish on private tech valuations. 69 percent of respondents believe tech valuations will at least remain the same, with 51 percent believing valuations will at least marginally increase. More than half of investors continue to think private tech companies offer better potential for returns compared to public tech companies. However, investor pessimism is growing with 19 percent picking neither public or private tech companies, compared to 3 percent in 2017 and zero percent in 2016.

Investors expect a slowdown in IPO activity in 2019. After a busy year for IPOs in 2018, investors say those numbers will return to normal levels: 59 percent predict there will be 6 to 14 unicorn IPOs (on average, there have been about 6-10 unicorn IPOs every year). Only 14 percent of investors believe IPO activity for unicorns in 2019 will match last year.

Biotech gaining on Fintech as the sector with the best growth prospects. Fintech remains number one. But 43 percent of respondents say biotech will also see substantial growth, up from 20 percent in 2017. Big data analytics and security software continue to follow close behind.

Investors retain generally positive opinion on secondary market exchanges. Over the past three years, investors have had consistently favorable views on putting money into late-stage VC-backed companies via secondary exchanges. According to our survey, 82 percent of respondents consider secondary market investments as either attractive or neutral, compared with only 19 percent of respondents who say these investments are unattractive.

Generally muted outlook for public markets in 2019. 63 percent of investors believe the S&P 500 in 2019 will be, at best, flat. Investors are not as bullish as they were in 2017, when 58 percent of respondents believed the S&P would gain at least 5 percent.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not 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 prudence 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.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management 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, 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.

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

Copyright SharesPost, Inc. 2020. All rights reserved.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not 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 prudence 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.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management 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, 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.

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

Copyright SharesPost, Inc. 2020. All rights reserved.