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Meditating on the Private Markets in 2018 — Blog Recap

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Asa Lieberman   December 27, 2018

The end of each year brings with it a sense of familiarity and routine: holidays with loved ones, festive lighting all throughout town, the same old catchy holiday songs seemingly everywhere you turn… and year-in-review content. So much recap content.




In this spirit, we wanted to give our version of this style of content in the form of a blog-year-in-review. That is, a look back at some of our most popular pieces from the year. In a world of tech that has never been faster and a news cycle that has never been more sporadic (and exhausting), we hope you can kick back on the couch with a beverage of choice and enjoy some of our most popular blogs of 2018.

1. SoftBank: An Endless Reservoir of Dollars and Intrigue

Have you heard of this Japanese fund called SoftBank? Oh you have? I suppose when you raise $100B, you might warrant some attention… In late August, we released an in-depth report on SoftBank. The analysis was chock full of interesting research, including gems such as the following:
"Even at a more modest 20% hurdle rate, the Vision Fund will need to return almost $23 billion in realized equity value per year after the fund’s investment period. Including the annual interest payments, this equates to roughly the GDP of El Salvador every year over this period."
Read the full report here.

2. IPO Outlooks and Updates

Though we released our 2018 IPO Outlook in December of 2017, many of you were excited to read our mid-year update which detailed what we got right, what we may have missed, and any new insights we had for the remainder of the year. The IPO Outlook is a staple here at EquityZen, and so we were thrilled to see that your excitement continued on through to the new 2019 IPO Outlook. Others were watching too, as our 2019 IPO Outlook was picked up by many major networks, including our 4-part series on Yahoo! Finance.

Download the full 2019 IPO Outlook here. Read the 2018 IPO Outlook Update here.

3. Value Private Companies the EZ Way

At the end of Q3, we let you all under the hood and gave you a complete guide to how we value private companies. Our Research Team uses these methods when reviewing the many pre-IPO companies that come across our platform, and now you can use these techniques when reviewing our offerings, company valuations, or simply for your own entertainment (though, if valuing private companies is your idea of entertainment, then check out our Careers page because we should talk!)

Read through the how-to valuation guide here.

4. Spotify’s Non-IPO

Remember Spotify IPO’d this year? We know, it seems like just yesterday Napster was a thing. Well maybe not Napster, but hey, vinyl is back so is anybody really sure what year it is in the music industry? In April, Spotify opted to eschew the standard IPO process and instead list directly onto NYSE in what many referred to as a “non-IPO.” We broke down the difference between an IPO and Initial Public Listing, as well as what the success of this style of exit would mean for the future of the private and public markets.




Read the full piece here.

5. Oldies but Goodies

As is often the case, we received many hits to our evergreen content from yesteryear. These are some of our greatest hits, including:
  • Understanding equity comp for employees (read it here)
  • NSOs vs ISOs (read it here)
  • Understanding RSUS like your boss (read it here)

Thank you to all of you for continuing to support EquityZen as we strive to bring liquidity to early startup employees, access to investors, and education materials on the private markets to the greater internet populous. We hope you’ve enjoyed our EZ Meditations over the course of the year and we look forward to bringing you even more content in 2019! And from all of us here on the EquityZen Team, we wish you a sincere Happy Holidays and good fortune in the New Year!

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SoftBank-Backed Guardant Health IPO: A Litmus Test for Cancer Gene Sequencing?

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Adam Augusiak-Boro   September 13, 2018

A Closer Look at Guardant Health’s Impending IPO


Guardant Health, which filed an S-1 on September 5, 2018 in anticipation of going public, is a precision oncology company that aims to improve the diagnosis and treatment of cancer through its proprietary gene sequencing technology. Founded in 2012 in the San Francisco Bay Area, Guardant has received over $500 million in private funding, most recently closing a $360 million round in May 2017 led by SoftBank’s Vision Fund. The company plans to list on the NASDAQ under the ticker “GH.” Timing, pricing and size of the offering are still TBA.




Guardant’s sector, precision oncology, focuses on “matching cancer patients to personalized treatments based on the underlying molecular profile of their tumors.” In other words, precision oncology aims to treat cancer with a scalpel instead of a sledgehammer. Traditionally, a tumor’s molecular information has been collected through a tumor tissue biopsy requiring surgery. However, Guardant’s technology allows for liquid biopsy-based tests, or the extraction of a tumor’s molecular information via a blood test. Unlike tissue biopsies, which Guardant also argues are more invasive, time-consuming and costly, liquid biopsies can be used across all stages of cancer (including early stages) and provide a more representative molecular profile of a tumor in its entirety, improving diagnostic and treatment abilities.



Guardant Health’s IPO may serve as a litmus test for more pure-play, gene sequencing oncology companies.


Notably, Guardant’s competitors are mostly diversified, large, multi-billion-dollar companies with substantial operating histories. Additionally, Guardant Health’s younger competitors have largely remained private, such as Adaptive Biotechnologies, or have been acquired, such as Foundation Medicine, Inc. Consequently, Guardant Health’s IPO may serve as a litmus test for more pure-play, gene sequencing oncology companies.

Because of the advantages of liquid biopsies, many leading companies are entering the space and competing with Guardant Health. Guardant’s main competition comes from diagnostic companies that profile cancer’s molecular information using gene sequencing in either blood or tissue. Within the liquid biopsy sector, Guardant’s chief public competitors include Roche Holdings, Inc., Thermo Fisher Scientific Inc., Illumina, Inc., Qiagen N.V. and Sysmex Inostics.  Illumina-backed GRAIL and Natera Inc. are also developing early cancer detection tests. Traditional public competitors in the broader tissue-based genomic profiling sector include Laboratory Corporation of America, Quest Diagnostics Inc., and Myriad Genetics. For reference, we have included below one-year forward Price / Sales multiples for Guardant’s closest public competitors.

Guardant Health Public Comparables (as of Sept. 10, 2018):


                                                           Source: YCharts data as of September 10, 2018
                                                                                           *Represents TTM figures
                                                                                           **Excludes data for Thermo Fisher Scientific, Laboratory Corp. of America and Quest Diagnostics



Summary--Can Guardant Prevail Over the Giants?


In recent newsletters we highlighted the growing dominance of large companies over smaller challengers.  Relatedly, despite some stumbles over the summer from the tech giants, Amazon, Apple, Google and their peers (of which there are few) continue to outperform and concentrate tech dominance within their hands.  With Guardant’s IPO, we see another smaller challenger to established companies, like diagnostics and biopharmaceutical giants Illumina, Inc. and Roche Holdings.  Hoping to avoid a similar fate faced by other prominent emerging companies, who were either outspent or acquired by larger rivals, Guardant’s IPO may further illuminate whether the corporate elite’s cash war chest is too great for most entrepreneurial ambitions.

Click here to download a full report on Guardant's S-1 filing, which includes a deeper dive of the analysis above. As you evaluate prior investment decisions or whether to buy GH in the future, please consider our key investment highlights and considerations from Guardant’s S-1 filing in our report. For more information on all things private markets, IPOs, and investor/shareholder education, please check out our Knowledge Center.


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SoftBank: Vision or Delusion?

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Adam Augusiak-Boro   August 23, 2018

On October 14, 2016, SoftBank shocked the world with the announcement of its $100 billion Vision Fund, which would focus on investing in late-stage technology companies. Within 7 months of the announcement, SoftBank had already cemented $93 billion in commitments and has since closed on the entire $100 billion amount.  Now, as SoftBank begins to deploy capital from the fund, we believe it faces a colossal undertaking in delivering competitive returns to its investors, which include tech titans like Apple and Qualcomm, as well as the Saudi and Abu Dhabi sovereign wealth funds.





Assuming an internal rate of return (“IRR”) of 20%, which is quite modest by VC standards, our research team estimates that SoftBank will have to generate over $142 billion in cash for the Vision Fund, which is approximately what Amazon was worth 16 years after its IPO. We further argue that, to compensate for the riskiness of SoftBank’s underlying investments, its investors are likely expecting returns of at least 30 to 40%, or a confounding $35 to $55 billion of cash generated per year in the second half of the fund’s life.  This would be the equivalent of spitting out an eBay-to-Tesla-sized company every year at current market prices.

“Masa’s ability to raise money is staggering,” according to Atish Davda, EquityZen CEO and Co-Founder. “SoftBank cemented $93 billion in only 7 months for its Vision Fund.  Compare that to the entire U.S. venture industry that took over 3 years starting in 2014 to cross $100 billion raised. The real question for Masa now is whether he’ll be able to generate competitive equity returns, especially following the mega rounds SoftBank is leading at seemingly frothy valuations.”

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