Q4 2018 Update
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 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.
In 2018, the SharesPost Index increased 41.9 percent. By comparison, both the S&P 500 and the Dow Jones U.S. Technology Index decreased by 6.2 percent and 1.9 percent respectively Primary funding rounds during this period included Instacart, Chargepoint, Coinbase, Auris Health, Netskope, InVision, and Snowflake. On average, the valuation of the companies that completed a primary funding round during Q4:2018 increased by 148 percent.
Early indications from Q1:19 data through February suggest the index has continued to increase in value. Through February 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. Key contributors to performance include companies that completed primary funding rounds including Postmates, SpaceX, DoorDash, Illumio, Databricks, Rubrik, Reddit, and Desktop Metal.
Since its launch on January 1st, 2017, the SharesPost Index has increased 68.18% percent through December 31, 2018. By comparison, the S&P 500 has increased 11.97 percent and the Dow Jones U.S. Technology Index has increased 32.87 percent during the same period.
Backtesting Results for 2015 and 2016
In order to provide a historical benchmark for the Index, we applied the same analysis, comparable Index composition and filtering criteria. As of December 31, 2014, we estimate 50 companies would have qualified to be included in the Index starting January 1, 2015. This number increased to 79 companies for a comparable Index benchmarking exercise starting January 1, 2016. Our analysis indicates that the basket of private growth companies would have increased 59.6 percent during 2015, and another 7.3 percent during 2016. This increase compares to –0.7 percent and 9.5 percent for the S&P 500, and 2.7 percent and 12.4 percent returns for the Dow Jones U.S. Technology Index.
On a cumulative basis, the Index would have increased roughly 188.1 percent from January 1, 2015, through December 31, 2018. This increase compares to 21.8 percent returns on the S&P 500 and a 52.4 percent increase in the Dow Jones U.S. Technology Index.
About the SharesPost Private Growth Index
The SharesPost Private Growth Index (the “Index”) is designed to measure the performance of VC-backed, U.S.-based, private growth companies. The Index is composed of a broad array of companies, spanning multiple technology-driven sectors including Consumer Internet, Enterprise Software, Energy, Health Care, and Financial Services. Now, investors in the private growth asset class will have a quantitative measure of fluctuations in the valuations of the companies driving its performance.
SharesPost Private Growth Index is designed to be a proxy of the performance of a group of private growth companies, but is not illustrative of any particular investment. You cannot invest directly in the SharesPost Private Growth Index.
The Index value is calculated based on a proprietary formula developed and compiled by SharesPost Research LLC to track and measure movement in the valuation levels of VC-backed private growth companies. The Index was originally set to a base of 100.00 at its initiation on January 1, 2017, and will be updated on a quarterly basis. The SharesPost Private Growth Index is based on data obtained from secondary transactions executed on the SharesPost Financial Corporation platform, publicly disclosed primary funding rounds, and valuation marks from publicly reporting institutional holders.
The SharesPost Private Growth Index is an equal-weighted, capital appreciation index designed to track U.S.-domiciled private growth companies. We define “private growth” as companies that are later stage than the typical definition of venture capital companies, but are obviously not yet public companies. There are multiple criteria we use to define the threshold between venture (or “early stage”) and growth (or “late stage”) for the purposes of inclusion in the Index. The principal metric relied on is capital raised –as when a company has raised USD $100M or more of capital in a single funding round (or USD $200MM or more capital combined), it is very typically well into its growth stage. The 2017 SharesPost Private Growth Index companies are listed here. At the end of each year, we will rebalance the Index and update the list of companies comprising the Index.