2018 Year in Review: Strong Exits Abounded, Unicorn Herd Grew, and Liquidity Solutions Expanded
December 27, 2018

2018 Year in Review: Strong Exits Abounded, Unicorn Herd Grew, and Liquidity Solutions Expanded

1. IPOs Bounced Back

2018 was a great year for tech IPOs, as Wall Street welcomed the most stock debuts of actively tracked firms of any year this decade. Of the 19 VC-backed tech IPOs we tracked this year, the majority of these exits saw a valuation premium at IPO, meaning the implied value at IPO surpassed the company’s private valuation as of its last primary funding round. Dropbox and Spotify were two of the most notable IPOs of the year.

Exhibit 1: Premium vs Downwards Trends 2018
Exhibit 1: Premium vs Downwards Trends 2018

Despite some down round IPOs, including Domo (-77 percent) and Bloom Energy (-50 percent), most companies saw healthy IPO premiums. The best performing company at IPO was Tenable Network Security, a provider of cyber security and compliance monitoring. Tenable’s performance mirrored that of cloud security provider Zscaler. On average, companies enjoyed a valuation jump of 51.7 percent in their stock debuts over their last private funding round. While past performance is not an indication of future returns, we believe the ample amount of available dry powder will help companies continue to grow.

In absolute terms, companies raised more capital privately prior to their 2018 IPOs. Earlier this year, we predicted that private IPOs — primary funding rounds raising over $100 million — would challenge traditional IPOs. That the majority of companies raised more dollars from private investors than public ones suggests a significant shift in capital markets. We will monitor this trend in 2019 to see if companies will continue to use IPOs as investor exits instead of a means of funding.

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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.