Q1 2019 Update
In the first quarter of 2019, the SharesPost Private Growth Index — which tracks valuations for 106 private growth firms — increased by 9.3 percent to 183.8 from 168.2 at the end of 2018. By comparison, both the S&P 500 and the Dow Jones U.S. Technology Index were up 13.1 percent and 19.3 percent respectively during the same period.
Since its launch on January 1, 2017, the SharesPost Index has increased 83.78 percent through March 31, 2019. By comparison, the S&P 500 increased 26.6 percent and the Dow Jones U.S. Technology Index increased 58.48 percent during the same period.
Early indications from Q2:2019 data through May suggest the index has continued to perform well in 2019: from the beginning of the year through May 31, the SharesPost Index has increased 12.5 percent. By comparison, both the S&P 500 and the Dow Jones U.S. Technology Index have increased by 9.6 percent and 14.6 percent respectively.
On a cumulative basis from January 1, 2015 to May 31, 2019, the SharesPost Index increased approximately 244 percent; the S&P 500 rose 33.7 percent and the Dow Jones Index increased 76.3 percent.
Public markets have benefitted from a strong recovery in Q1 this year after suffering substantial losses towards the end of 2018.
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 fifty companies would have qualified to be included in the Index starting January 1, 2015. This number increased to seventy-nine 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 in 2015 and 9.5 percent in 2016 for the S&P 500, and 2.7 percent and 12.4 percent returns for the Dow Jones U.S. Technology Index during those same years.
On a cumulative basis, the SharesPost Index would have increased roughly 215 percent from January 1, 2015 through December 31, 2018. This increase compares to a 38 percent return on the S&P 500 and an 83 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.