Q2 2019 Update
In the second quarter of 2019, the SharesPost Private Growth Index, which tracks valuations for 106 private growth firms, increased by 11.2 percent. By comparison, the S&P 500 was up 2.6 percent and the Dow Jones U.S. Technology Index was up by 2.4 percent during the same period.
Since its launch on Jan 1st, 2017, the SharesPost Private Growth Index has increased 105.63% percent through June 30, 2019. By comparison, S&P 500 has increased 31.39 percent whereas the Dow Jones U.S. Technology Index has increased 64.71 percent during the same period.
For the current year 2019, the SharesPost Index has increased 27.95 percent from January 1, 2019 to July 31, 2019. By comparison, both S&P 500 and Dow Jones U.S. Technology Index both have increased by 18.74 percent and 29.08 percent respectively.
On a cumulative basis, from Jan 1, 2015 to July 31, 2019, the SharesPost index increased approximately 268 percent; the S&P 500 rose 44.8 percent and the Dow Jones index increased 98.6 percent.
The Private Growth Index outperformed public benchmarks in Q2 2019.
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 or any other index. Past performance is no guarantee of future results.
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 “late stage” and have not yet entered the public markets. 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 will ordinarily be categorized as 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.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk and should only be considered a long-term investment. You must 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 you should complete your own independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or other 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.