Phil Haslett | Founder + Head of Investments | EquityZen
Hello Investors, (It's Kaylock Yam here, filling in for Phil Haslett)
"Marking" your private investments
We're in the middle of a short work week here in the U.S., hence this email being delivered on Wednesday
. Did you see that we introduced the EquityZen Top Trending Companies
list last month? We're working on the results from August, to be released soon. My guess is there will be companies with near-term IPO prospects (more on this below) that make the list.
The Wall Street Journal decided to publish a piece last week on Venture Capital fund performance highlighting a few big names
(Sequoia, Benchmark, Founders Fund, and Andreessen Horowitz). This is a big deal because VC returns are typically well-kept secrets, and any insight into VC performance helps inform the public on how VC economics work. One of the firms mentioned published a thorough response
later the same day, and Fortune's Dan Primack broke down the issue further
Source: The Wall Street Journal
We at EquityZen followed the back and forth with interest, and although we don't want to regurgitate all the points here, we want to focus on the key takeaway that Primack describes as "the broader point that all carrying marks on VC portfolios are subjective until there is a distribution."
Or, as described by a Limited Partner (LP) of Andreessen, "I can’t spend unrealized gains.
To rephrase in terms applicable to investors through EquityZen, valuing direct private investments can be subjective until there is a liquidity event. Marketplaces that provide for liquidity and resulting distributions play an important role in the investing ecosystem. Though today's private markets are far from perfect, ones guided by supply-and-demand principles like EquityZen do more than just play matchmaker.
In other news...
Will uncertainty about this year's unusual election season in the U.S. impact the prospects for the IPO market in September and October?
A summary from Dan Primack on VC returns, found mainly from Pension Fund data.
McClure, the outspoken VC behind 500 Startups, points to the increased M&A activity by incumbent companies as a leading indicator for what comes next.
Research firm Renaissance Capital expects 35-45 more IPOs for the rest of the year.