The calculation of the Index depends upon the following sources of Index constituent transaction and valuation data: (a) anonymized pricing data from private market secondary transactions facilitated by SharesPost Financial Corporation, a wholly owned broker-dealer subsidiary of SharesPost Inc. and Alternative Trading System; (b) data from primary financing rounds of private growth companies that becomes publicly available; and (c) publicly disclosed valuations of publicly reporting institutional investors. Between Q1:15 and Q1:17, our Index calculations have incorporated pricing from over 3,000 transactions, public fund marks, and primary funding rounds within the private growth asset class. The Publisher believes the Index Data represents the most reliable available inputs to an index of this kind and, when incorporated into the SharesPost Private Growth Index, provides investors with a useful benchmark for general valuation trends in the private growth asset class.
SharesPost Secondary Transactions
Among other things, SharesPost Financial Corporation ('SPFC") operates a platform to facilitate secondary transactions in the securities of private growth issuers. SPFC is also an Alternative Trading System registered with the Securities and Exchange Commission. Index Data includes pricing information generated by the transactions occurring in the securities of the Index companies on the SPFC platform. Enterprise values used in the calculation of the Index are inferred from the pricing of individual securities by the use of SharesPost Research’s proprietary waterfall model for each company. Note that, to adhere to certain confidentiality obligations and the preference of certain issuers, SPFC does not generally publish information specific to individual transactions and does not disclose the identity of the transacting parties. The Publisher believes that data from these secondary transactions, because they are arms-length purchases and sales by institutions and other accredited investors, represents an important input to the Index.
SharesPost Research scans a variety of sources daily for news and information regarding any of the Index companies. When it finds an indication that a company has closed an equity financing, SharesPost Research obtains certain of the company‘s public filings, including Certificates and Articles of Incorporation and federal Regulation D filings. These filings, taken together with other information typically available like company press releases and news stories and SharesPost‘s proprietary waterfall models, enable SharesPost Research to infer a company valuation implied by the sale of the company’s equity securities. These valuations are incorporated into the Index.
Publicly Reported Valuation Marks
An increasing number of publicly reporting institutional investors, including traditional mutual funds, are now participants in the private growth asset class. As publicly reporting entities, they must monthly or quarterly value the positions in their portfolio and disclose those values in filings with the U.S. Securities and Exchange Commission. SharesPost Research tracks publicly reporting institutional investors holding securities of Index companies and regularly obtains their most recent SEC filings. By applying our proprietary waterfall models to the funds’ portfolio securities marks, SharesPost Research is able to infer a valuation for the Index Companies. These valuations are incorporated into the Index.