“…the line between public and private markets continues to blur.”
Private Market ‘Algos’
// When it comes to valuing or predicting private company valuations it’s a bit of a crapshoot. Outside of analyzing a company’s financials, with imperfect information, people will use data like the latest funding, ‘digital momentum,’ or investor sentiment. However, everyone’s private ‘algo’ will have different inputs with different weights. This can be seen via the recent prognostications from CNBC, Forbes, and CBInsights. The companies chosen have similar characteristics, but surprisingly there wasn’t a lot of cross-over amongst these lists.
Companies of note: Databricks and Snowflake both have been rumored to be preparing for their imminent IPO’s.
Forbes Next Billion-Dollar Startups
Three companies of interest that look ‘undervalued.’
Acorn - Investment platform, $257M raised. Notable investors: Bain Capital, Greycroft, TPG.
Algolia - Search and discovery, $184M raised. Notable investors: Accel
Signal Sciences - Cybersecurity, $62M raised. Notable investors: Index Ventures, CRV.
Related, A Venture Capital Firm's AI Platform is Behind $100M of Its Investments (Axios)
‘EQT Venture's home-brewed Motherbrain platform represents a notable effort to adapt machine learning to the failure-prone process of picking and choosing early-stage tech investments. Motherbrain monitors over 10 million companies and takes data from dozens of structured and unstructured sources to identify patterns that may be useful as EQT Ventures searches for possible investments.’
Need to Know
‘Innovations in Capital Markets’
// FT Partners hosted Kelly Rodriques, CEO of Forge, Greg Brogger, Founder & CEO of SharesPost, and Tim Draper to discuss the merger of Forge Global and SharesPost – as well as innovations in the Alternative Investments Market.
The webinar is actually quite informative and sheds a lot of light on the potential of the secondary trading platforms. Even more interesting is getting to hear Mr. Draper’s perspective on the need for liquid private markets. He’s a firm believer in free markets and is a big proponent of making these markets even more open and transparent.
Law Firm to Know
// Fenwick & West is a law firm, based out of Mountain View, CA, that provides a host of services to the startup and venture community. This week, TechCrunch highlighted some data the law firm published showing how dealmaking has remained strong throughout the pandemic.
‘More astonishing was the sheer pace of investing into startups in Silicon Valley. Though there was talk about investors needing to stop and assess the health of their portfolio companies from mid-March to early April, it seems now that VCs never really stepped off the gas…For what it’s worth, many of these were later-stage deals. Fenwick’s data shows the percentage of Series D and E+ deals increased to 38% of all financings in April, up from 21% in March’
Exchange (?) to Know
// I found Human IPO via Product Hunt. The startup is a marketplace for publicly traded people. The platform allows you to ‘issue, trade, and redeem human equity backed by time.’
Soon, everything and anything will be tradeable.
If You’d Like to Know
// Private
Marc Andreessen Explains How Hedge Fund Managers are Different From Everybody Else (CNBC)
AST Private Company Solutions Finalizes Partnership with EquityZen
From Carta…Why Fintechs Partner with Community Banks
Palantir Raises $500 Million From Japan’s Sompo Ahead of Listing (Bloomberg)
Cash Flows Into U.S. Growth Funds Surge (Reuters)
SoftBank Invests in Credit Suisse Funds That Finance its Technology Bets (FT)
Japan’s King of Deals Is Preparing to Pounce Once Valuations Dip (Bloomberg)
Private Equity Barons Grow Rich on $230B of Performance Fees (FT)
EU to relax state aid rules that hindered support for start-ups (FT)
// Public
VIX Won’t Go Below 20 Until There’s a Covid Vaccine, Cantor Says (Bloomberg)
Blame the Fed for the Disconnect in Markets (Bloomberg)
UBS Tells Rich Clients to Leave Stock Bubbles to Day Traders (Bloomberg)
New York Hedge-Fund Traders Aim to Avoid City Tax by WFH (WSJ)
Data
// Via their ZX Data Partner program, Zanbato examines how more than 200 institutional investors adjusted their private company positions in March.
// Thanks
This newsletter is created and authored by Bryce Tolman and is published and provided for informational purposes only. The information in the newsletter constitutes the Author’s own opinions. None of the information contained in the newsletter constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Author is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the newsletter may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.