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.
Q3 2018 Update
In third quarter of 2018, the SharesPost Private Growth Index, which tracks valuations for 106 private growth firms, increased a moderate 4.7 percent to 152.47 from 145.62 from the previous quarter. By comparison, the S&P 500 grew 7.2 percent whereas the Dow Jones U.S. Technology Index jumped 8.8 percent during the same period.
Since its launch on Jan 1st, 2017, the SharesPost Index increased 52.47 percent through Sept 30, 2018. By comparison, S&P 500 grew 30.15 percent whereas the Dow Jones U.S. Technology Index jumped 61.57 percent during the same period.
For the first 9 months of 2018, the SharesPost Index increased 28.7 percent. By comparison, S&P 500 gained 9 percent whereas the Dow Jones U.S. Technology Index increased 19.3 percent during the same period.
On a cumulative basis, from Jan 1, 2015 to June 30, 2018, the SharesPost index increased approximately 161.2 percent; the S&P 500 rose 41.6 percent and the Dow Jones index increased 86.5 percent.
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.
Index Results for 2017
During 2017, the SharesPost Private Growth Index increased from 100.00 as of Jan 1st, 2017 to 118.5 as of December 31, 2017, implying 18.5% increase in the valuation of the private growth companies included in the Index. This compares to 19.4% increase in the levels of S&P 500 and 35.4% increase in Dow Jones U.S. Technology Index. During 2017, the Index had 87 companies included in the calculation.
In fourth quarter of 2017, the SharesPost Private Growth Index increased 5.2 percent to 118.48 from 112.63 from the previous quarter. By comparison, the S&P 500 rose 6.1 percent and the Dow Jones U.S. Technology Index jumped 8.5 percent during the same period. Key events affecting include the primary funding rounds completed by SpaceX, Affirm, Carbon, Anaplan, and Slack. On average, the valuations of these companies increased by 66 percent.
Early indications from Q1:18 data through February suggest that the Index has continued to increase in value with a mixed performance versus comparable public market indices. For YTD through Feb 28, 2018, our preliminary data gathering indicates that the Index has increased roughly 2.3 percent, a modest outperformance versus a 1.5 percent increase in the S&P 500 but lagging a 7.4 percent increase in the Dow Jones U.S. Technology Index.
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 74.8 percent from January 1, 2015, through March 31, 2017. This increase compares to 14.8 percent returns on the S&P 500 and a 29.8 percent increase in the Dow Jones U.S. Technology Index.