Weekly Update #141: Private Equity vs Public Markets

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Hello Investors,
Private Equity vs Public Markets
Wondering on how Private Equity has performed compared to public equities, especially in down-markets? Our friends at Artivest wrote an excellent piece about the asset class's returns, which you can read here.
Using data from Cambridge Associates and Preqin, Artivest concluded:
"...private equity has historically added the most value relative to the S&P 500 in vintages where the fund's life is characterized by tepid U.S. economic growth and weak S&P 500 performance. This may come as a surprise initially, but it is actually intuitive: private equity funds start with an investment period, generally 3-5 years, during which capital is deployed. If the market is declining or volatile during that period, dealmakers at private equity funds may have the opportunity to invest at favorable prices — if, that is, they can muster the conviction to stay off the sidelines."
What's even more important is, obviously, management selection. Preqin data shows that the top quartile managers add an incremental 1,000bps (10%) of IRR (internal rate of return) vs the median private equity IRR. Fortunately, secondary investments in our pre-IPO space offer the opportunity to know which managers are involved. This allows the EquityZen team to gauge the historical performance of the managers involved to evaluate if a company has a higher likelihood of success versus its peers.
In other news...
Though the talking heads are divided on the ultimate direction of markets in 2016, no one seems to dispute that the reliable 8% IRR figure formerly known as “equity-like return” has vacated the premises, at least for the foreseeable future.
Since their previous post about tech layoffs, over 20 high profile layoff announcements have occurred. Kevin Liu discusses how this proves tech layoffs have begun to slow.

Investors in Uber and staff hoping for a fast flotation from the world's biggest ride-hailing service will be disappointed, chief executive Travis Kalanick told CNBC.
After a few bumps over the last 9 months, with little shocks in July 2015, a bigger shock in August 2015, and a ruthless slashing of very visible and great public technology companies in January and February 2016, many people commented that the entire environment has “chilled.” Now, as March is unfolding, that is changing a bit.
Phil Haslett | Founder + Head of Investments | EquityZen 

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