Traders Circle’s Post

🚀 Nasdaq Private Market is set to revolutionize the IPO landscape with its plans to introduce private IPOs in the US. This groundbreaking move will provide VC and PE firms with an innovative alternative for realizing the value in their portfolios. 📈 As the traditional IPO market continues to face challenges, asset owners are seeking new avenues for liquidity. Nasdaq Private Market's private IPOs will enable accredited investors to access company financial information and participate in periodic auctions for stakes in closely-held companies. This structured approach will offer predictable windows of liquidity, empowering investors while allowing large firms to proactively manage liquidity. 💼 Backed by renowned banks such as Goldman Sachs and Citigroup, Nasdaq Private Market has already established itself as a trusted platform for secondary market trading of private shares. With over $50 billion in executed private trades and a robust pipeline, the company is well-positioned to reshape the IPO landscape. The first private IPOs are anticipated to launch in the second half of 2024, marking a significant milestone in providing VC and PE firms with enhanced options for value realization and addressing the liquidity challenges they face. #IPO #nasdaq #venturecapital https://lnkd.in/g3WwgMAY

Interested in getting in early on the next big thing? Pre-IPO investing offers the potential for high returns, but also comes with risks. So is it worth it for the average investor? Here we break it down. https://hubs.la/Q02zZ70P0 #privatemarket #privatestock #preIPO #investing

As global LPs, once burned by India, flirt with re-entering the market, as local managers raise ever larger funds, as domestic capital discovers private equity, and as the IPO market remains robust, there is renewed confidence in an expansion of the homegrown GP universe. This comes with a big caveat though, especially on the VC end of the market. View more: https://lnkd.in/gC-RaRNs

Interested in getting in early on the next big thing? Pre-IPO investing offers the potential for high returns, but also comes with risks. So is it worth it for the average investor? Here we break it down. Is Pre-IPO investing Risky? | EquityZen https://hubs.la/Q02NJT3P0

VC valuations continued to slide from their peaks in 2021 and early 2022, with only pre-seed and seed deals bucking the trend. While median early-stage and late-stage valuations fell to their three- and five-year lows, respectively, an abundance of small funds competing for seed deals helped to keep prices up for companies in those categories. Not only did 2023 see a dismally low number of IPOs, but the median valuation of startups that managed to make a public debut declined to the lowest level in a decade. Although M&A activity dropped too, acquisition valuations increased year-over-year, according to our 2023 Annual US VC Valuations Report, sponsored by Morgan Stanley At Work and Mintz. #VCvaluations #venturecapital #vcfunding #capitalmarkets #ipos #seedfunding #capitalreport

Equity signifies ownership in a company, entitling stakeholders to a portion of its assets and profits. This ownership stake represents a claim on the company's resources and earnings, granting shareholders voting rights and dividends based on their percentage of equity. Investors acquire equity through various means, including direct investment or employee stock options, aligning their interests with the company's success. Equity is a measure of ownership and value, reflecting the potential for future returns and providing investors with a stake in the company's growth and prosperity. It forms the cornerstone of corporate finance and investment, shaping ownership structures and governance practices. #equity #financialtips #investors #startups

Let's start to define the relationship between company valuations and VC returns, and yes! it is not as simple as 2x the valuation = 2x the return. When a VC gives a company money it buys new shares of the company. The value of the round is based on the share price. As companies raise further rounds, the firm issues additional new shares which dilutes the shareholding. Illustrating an example below - a. Company starts with 100 shares among two founders. b. 1st investor buys 20 new shares for 1cr per share to give the company money to grow. Now there is a total of 120 shares and an imputed valuation of 120*1Cr= 120 crores. c. Next investor buys 30 new shares for 1.6 Cr per share. The company now has a total of 150 shares and an imputed valuation of 150*1.6Cr= 240 crores. Do you see here that while the valuation doubles from 120 to 240, the value of the 1st investor's share is just 1.6x (1.6/1). What exactly happened? - There was a dilution of 20% (30 new shares / 150 total shares) Formula can be = Valuation multiple X Retention (Or 1 - dilution) = 240/120 * (1 - (30/150) = 2 *(1 - 0.2) = 2 * 0.8 = 1.6x As a back-of-the-hand calculation, always assume a 20% dilution for each round. Thus, if the valuation jumped by 400x and took 6 rounds, how much do you think the VC made? Take a moment to do this on your own, Let's start by calculating how much we retained of our shareholding, we assume a 20% dilution for each round. This would mean after every round we held (1 - 0.2) = 80% of our last round holding. So over 6 rounds, we would hold = 80% * 80% * ..... 6 times = (.8)^6 = .25 or close to 25% So now the multiple seen on the investment by the VC would be = 400 * 25% = 100x While the valuation jumped over 400x, it took 6 rounds for that to happen wherein the VC retained just 25% of their holding making a 100x return on the money invested. This is the math that VCs follow to calculate how much money they make and in creating a unicorn opportunity they typically do a 60x -100x on their initial investment. Note, that I have just calculated this number for the initial investment. If they invest in further rounds you can use the same formula to get to their multiple for that investment. Let me know if you have any questions. #BuildingRight #BaniyaBuddhi

“Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn” Those number are crazy ! I’m very much looking forward to seeing how those private companies will perform once the exit market will get more open. #privateequity #secondary #ipo #ai #scalex #scalexinvest

This is a nothing burger. VCs don't invest in pre-seed and seed stages therefore they don't impact those valuations. And this makes it sound like the seed stage valuations are holding steady and is a good thing. Not really, these stages are harder than ever to get funded. "VC valuations continued to slide from their peaks in 2021 and early 2022, with only pre-seed and seed deals bucking the trend. While median early-stage and late-stage valuations fell to their three- and five-year lows, respectively, an abundance of small funds competing for seed deals helped to keep prices up for companies in those categories."

Will Private Equity and PE-backed IPOs show a strong 2024? Q2 sure looked positive, with some strong dealmaking especially in Europe! - Exit markets have also picked up in the second quarter, with an increase in value & early resurgence of PE-backed IPOs 💹 - secondaries market has had a record first half providing crucial liquidity and demonstrating the industry's adaptability - AI definitely helped revive the PE Pulse and we look forward to a strong year #Privateequity #growth #opportunities #bethechange