Reflecting the continuing strength of the private tech growth asset class, valuations of late-stage, venture-backed tech companies jumped 8% in the first quarter, the largest quarterly increase since 2015, according to the SharesPost U.S. Private Growth Index.
“The private tech growth asset class is enjoying a bull market as demonstrated by a variety of key metrics,” said Managing Director Rohit Kulkarni, Head of Research for SharesPost, Inc. “Valuations are rising, the IPO window is wide open, and M&A activity is very strong. These conditions bode well for remainder of 2018.”
The Index, which tracks 106 companies, rose to 128.0 as of March 31, 2018 from 118.5 as of December 31, 2017 – an 8% increase in the total valuation. The Q1 2018 gain compares to a 1.2% decline in the S&P 500 and a 3.4% increase in the Dow Jones U.S. Technology Index.
Since the launch of the Index on January 1, 2017, the valuations of private growth companies have increased 28% through March 31, 2018, surpassing S&P 500’s 18% rise but trailing the 40% increase in Dow Jones U.S. Technology Index during the same period.
Preliminary Q2 2018 data indicate that the Index continues to outperform benchmark indices amid signs the bull market is stalling.
On a cumulative basis, the Index has increased 119.25% from January 1, 2015 through March 31, 2018, compared to an increase of 28.3% for the S&P 500 and an increase of 61.7% for the Dow Jones U.S. Technology Index.
To find out more about the drivers of growth in the first quarter, click here.
About the SharesPost U.S. Private Growth Index
Each quarter, the Index states the percentage gain or loss in valuation for the companies included in the Index. The Index is currently composed of U.S.-based private growth companies in multiple tech sectors, including Consumer Internet, Enterprise Software, Energy, Healthcare and Financial Services. There are 106 companies in the Index as of March 31, 2018, compared to 87 companies as of Jan 1, 2017. The cumulative market capitalization of the companies in the index has increased from $317 billion at the beginning of 2018 to $325 billion at the end of the first quarter of 2018. Median market cap of the companies in the Index has increased to $1.21 billion.
The Index’s numerical value is based on a formula developed by SharesPost Research LLC, a wholly owned subsidiary of SharesPost, Inc. The Index relies on data from SharesPost Financial Corporation’s secondary transactions, the Index companies’ primary funding rounds and publicly available valuation marks, including the holdings of 75 publicly reporting mutual funds. For complete disclosures and more details about the Index methodology, including the companies that comprise the Index, click here.
About SharesPost, Inc.
SharesPost is a FINRA -registered broker-dealer, SEC-registered Alternative Trading System and Registered Investment Advisor. SharesPost helped launch the secondary market for private tech companies in 2009 and has built one of the leading platforms for secondary transactions and digital securities. SharesPost provides the private tech asset class with a suite of trading and lending solutions to facilitate shareholder and option holder liquidity. With more than $4 billion in secondary market transactions in the shares of more than 200 leading technology companies, SharesPost provides the trading, research and online tools to transact in the private market with confidence. For more information, visit sharespost.com.
Cautionary Note Regarding Forward-Looking Statements
The matters described herein contain forward-looking statements. These statements include, but are not limited to, statements about research on late-stage, venture-backed companies. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond SharesPost’s control. We undertake no obligation to release any revisions to any forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180712005109/en/