Weekly Update #206: Growth Equity, The Emergent Asset Class

EquityZen has produced these weekly updates for secondary investors, shareholders and company representatives.

If you find this useful, subscribe to our weekly newsletter!

Weekly Update

Live offerings, preview listings, and some analysis on the pre-IPO space

In order to view EquityZen's Investment Offerings, you must be an Accredited Investor.

Verify your Accredited Investor status

Hello Investors,

Growth Equity: Direct late-stage investments in leading private companies with proven business models and high expected growth

Over the last decade, Growth Equity activity has increased substantially, reaching its height in 2015 when $39 billion in new investments were made.

Growth Equity Activity(Source: Venture Monitor)


Rising valuations in private markets leave fewer opportunities to public investors. The emergent asset class allows late-stage private companies to defer IPOs longer while scaling their operations, in hopes that they will reach profitability and a higher valuation down the road. In 2015, when Growth Equity markets reached their peak, the proportion of profitable IPOs fell to 34%, the lowest level in a decade.

profitable_ipos
(Source: TechCrunch)


However, Growth Equity investments still carry significant risks as they depend heavily on continued growth, and, ultimately, underlying company profitability. The recent IPOs of Tintri (NASDAQ: TNTR) and Blue Apron (NYSE: APRN) both highlight how companies that were last valued at 2015’s market highs have found hard landings in public markets due to lack of profitability, which is typically a greater focus for public investors.

In other news...

Thanks,
Phil Haslett
Founder + Head of Investments, EquityZen

 

Funding Rounds Since Last Week

Invest in LendUp
LendUp - LendUp gets strategic investment from PayPal and adds to its executive team (TechCrunch)

Have questions?