Q1 2018 Prime Unicorn Index Reconstitution Report

Post by Lagniappe Labs LLC

The Prime Unicorn Index added nine constituents and dropped one in its quarterly reconstitution, for a total of 93 index components as of Q1 2018.

The additions to the Index are: Urban Compass, AvidXchange, Discord, Bolt Threads, Proterra, WellTok, Flatiron Health, Health Catalyst, and Pindrop Security.

The deletion from the Index is: Forescout Technologies

As more high-performing companies defer or eliminate plans to go public, the demand for information and investment exposure to this growing portion of the American economy has soared. The Q1 2018 Prime Unicorn Index Reconstitution Report provides more information on the new nine constituents and how they compare against the Index.

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IVC-APM Most Active Venture Capital Funds in Israel – 2017

Guest Post by: IVC Research Center

»  Israeli VC’s activity grows with 212 first investments – 48% of the total – a 5-year record
»  Number of early stage rounds (seed + A rounds) dropped 14% in 2017 compared to 2016

»  An increase of 22% in the number of first investments in B rounds in 2017 compared to 2016

Vertex Israel ranked at the top of the 2017 list with 12 first investments. aMoon Partners, a life sciences fund managed by Check Point founder Marius Nacht, ranked second, performing 11 new investments from its $150 million fund. Three funds shared third place – F2 Capital, iAngels Seed Fund and Mindset Ventures with ten new investments each…Read more

The report contains analyses based on the IVC Most Active Investors Dashboard, an IVC Industry Analyticsbusiness intelligence product, containing detailed information on active VC and other investors via an interactive, user-friendly interface.

The Top 20 Most Active Investors Dashboard and Most Active Investors Visual Dashboard are available online to IVC Industry Analytics subscribers only and present a wealth of continually updated investor data, which can be filtered according to year, type of investor, type of investment and more.

Previous Reports

   » See 2016 Most Active Funds – Press Release

» See 2015 Most Active Funds – Press Release

   » See 2014 Most Active Funds – Press Release

» See 2013 Most Active Funds – Press Release

» See 2012 Most Active Funds – Press Release

Q4 2017 Prime Unicorn Index Trend Report from Lagniappe Labs, LLC

The Q4 2017 Prime Unicorn Index Trend Report is an analysis of 85 components that comprised the Index in the last quarter of 2017. The Index includes both unicorns and “approaching unicorns,” which are private companies with a valuation of at least $500 million. Valuations for individual components are determined by an analysis of various documents, such as: Certificates of Incorporation, Employee-Plan Exemption Notices, Limited-Offering Exemption Notices, Annual Report filings, Form Ds, bankruptcy filings, and many more sources. Utilizing all sources, we can extract key Deal Terms, such as: Round of Financing, Round Direction, Liquidation Preference, Liquidation Multiple and Dividend Rate. The report analyzes the different trending deal terms for a more granular picture of the capitalization structures surrounding the Q4 2017 Index components.

The Prime Unicorn Index Announces Quarterly Reconstitution

The Prime Unicorn Index, the first index to track the share price performance of privately-funded U.S. companies, today announces its quarterly reconstitution. The index, which gives equal-weighting to its constituents, has added nine companies that qualify as Unicorns or Approaching Unicorns to its previous list of 85 privately funded companies.

The companies added to the index include AvidXchange Inc., Proterra Inc., WellTok Inc., Health Catalyst Inc., Flatiron Health Inc., Urban Compass Inc., Pindrop Security Inc., Bolt Threads Inc. and Discord Inc. The reconstitution was effective at market close on Jan. 17, 2018.

With investor appetite for companies that have not yet made their shares available via IPO soaring, companies that have surpassed $1 billion valuations are given Unicorn status, while companies that have achieved $500 million valuations are classified as Approaching Unicorns in the Prime Unicorn Index. Reconstitution of the index relies heavily on Lagniappe Labs’ proprietary research and difficult-to-source, objective data to determine true valuations of privately-funded companies in a measurable and verifiable way.

“The Prime Unicorn Index serves to benchmark the performance of private companies in line with how the S&P 500 Index tracks publicly traded companies,” noted Barrett. “We are excited to be the primary resource for investors and help them better understand how to assign the true valuation of private companies as they look to go public.”

The new constituents join the index’s well-known companies, including Uber, WeWork and AirBnB. The newly added components are market leaders in technology, software and healthcare and all have excellent investor bases.  

“Taken as a whole the Prime Unicorn Index achieved a positive return of 9.3% in 2017 and provides a unique way for institutional investors to access the private markets, whether they want to go long or short,” added Barrett.

For more information, please visit PrimeUnicornIndex.com.

About The Prime Unicorn Index

The Prime Unicorn Index is an equally-weighted price return index that measures the share price performance of U.S. private companies valued at $500 million or more. The Index was launched by Lagniappe Labs and Level ETF Ventures. The index uses Lagniappe Labs’ proprietary research and difficult-to-source, objective data to determine true valuations for privately-funded companies in a measurable and verifiable way.

About Lagniappe Labs

Lagniappe Labs uses state, federal and difficult-to-acquire corporate filings in a fully configurable platform that allows users to analyze the value of privately held companies. The technology provides tools and data to build financial models on specific sectors, people, industries, investors and more. Lagniappe Labs federates disparate sources of information to drive objective analysis on private company investments.

Lagniappe Labs replaces subjective and error-prone ‘wiki’ data with actual corporate documents and data so investors and potential investors in privately held companies have true and accurate information to drive decision making.

New Prime Unicorn Index Tracks Private Companies on the Road to IPO

Index uses Lagniappe Labs’ proprietary valuation and pricing data to track top-tier, private companies with Unicorn or near-Unicorn status

SHREVEPORT, La.–(BUSINESS WIRE)–Lagniappe Labs has launched a new, equally-weighted price return index that tracks the performance of some of the most notable privately-funded companies based in the U.S. In partnership with Prime Indexes, Lagniappe Labs created the Prime Unicorn Index as a tool to benchmark the aggregate performance of private companies who have achieved or are approaching the $1 billion valuation level. The index uses Lagniappe Labs’ proprietary research and difficult-to-source, objective data to determine true valuations of privately-funded companies in a measureable and verifiable way.

Unicorns like Uber, AirBnB, Lyft, SoFi and WeWork are well-known to investors as private companies with valuations in excess of $1 billion. While there are over 200 Unicorn companies across the globe with a combined value of over $730 billion, the Prime Unicorn Index currently includes 85 companies Lagniappe Labs has classified as a Unicorn or Approaching Unicorn based on hard-to-secure public filings and data, including federal and state filings and company disclosures. The index universe will include only U.S.-based private companies with valuations at or exceeding $500 million.

“Valuations of private companies do not need to be subjective or opaque, and in fact, an official valuation can be derived when using the right data,” explains Ross Barrett, Co-Founder of Lagniappe Labs and founder of the Prime Unicorn Index. “We differentiate ourselves in our data standards and practices by using difficult-to-access information to assign an official value to these private companies that is not available anywhere else.”

As more high-performing companies defer or eliminate plans to go public, the demand for information about and investment exposure to this growing portion of the American economy has soared. The Prime Unicorn Index aims to offer investors a means to evaluate the private company space before these highly-valued firms go public.

“In today’s market environment, there is tremendous opportunity and investor interest in the private company space. However, there is very little in terms of concrete, trustworthy information for investors to act on,” explains Kris Monaco, Co-Founder of Level ETF Ventures and the firm’s related Prime Indexes business. “The companies in the index are the same businesses modern investors are using and touching on a daily basis. They are riding Uber to work, using AirBnB to book their next vacation and taking advantage of WeWork spaces to run their small business. There is a great deal of interest in these companies, and the Prime Unicorn Index is designed to help capture that enthusiasm.”

The index will serve as a benchmark for performance and valuation among private companies and for the creation of financial products. Index values are calculated daily and distributed weekly. The index will be rebalanced quarterly to reassess companies whose values may have fallen below Unicorn status or those who have gone public.

“The Prime Unicorn Index is to private companies what the S&P 500 Index is to publicly-traded companies,” adds Barrett. “We believe investors will look to the index as a way to determine the strength and overall value of private companies where they’re seeking exposure.”

For more information, please visit PrimeUnicornIndex.com or contact info@primeunicornindex.com.

About The Prime Unicorn Index

The Prime Unicorn Index is an equally-weighted price return index that measures the share price performance of U.S. private companies valued at $500 million or more. The Index was launched by Lagniappe Labs and Level ETF Ventures. The index uses Lagniappe Labs’ proprietary research and difficult-to-source, objective data to determine true valuations for privately-funded companies in a measureable and verifiable way.

About Lagniappe Labs

Lagniappe Labs is a financial technology company specializing in the development of financial products and trading software for alternative investment professionals. The company has compiled millions of data points on privately funded companies using disparate data sources, providing investment professionals with detailed analysis of private company valuations, share prices, and securities sold.

About Prime Indexes

Prime Indexes creates financial indexes that solve problems for both professional and self-directed investors. Our index designs focus on emerging trends in the exchange-traded fund (ETF) industry, and our founders have participated in the creation and launch of over a hundred financial products and indexes across all major asset class. Prime Indexes are used as the basis for innovative new investment solutions for investors, and use intuitive design principles so that new investment products can ultimately provide low-cost, efficient, and convenient access.

Contacts

Gregory FCA for the Prime Unicorn Index
Marissa Foy Comerford, 610-228-2104
unicornindex@gregoryfca.com

Snap Judgment: Unicorns Under Pressure and Addressing Risks of Private Lawsuits

 

 

By: Joshua M. NewvilleWilliam Dalsen and Alexandra V. Bargoot of Proskauer

The recent IPOs of Snap, Inc. and Blue Apron indicate that while the IPO pipeline continues to flow, there may be a cautionary tale for “unicorns” – venture-backed companies with estimated valuations in excess of $1 billion.

After Snap went public in March, it posted a $2.2 billion loss in its first quarter, yielding a 20% same-day drop in stock price that erased much of the company’s gains since its IPO. A snapshot of Snap’s stock price shows the obvious risks faced by late-stage investors in unicorns.  High valuations are not a guarantee of continued success, particularly where historical performance and profitability are lacking.  Although one commentator recently asked: “Are Blue Apron and Snap the worst IPOs ever?”, there is plenty of time for those stock prices to recover, especially in the months after their insider lockup periods expire.

Less well-known is how those risks can create conflicts that lead to litigation in the private fund space. The unicorn creates a dilemma for the private fund backing it.  On the one hand, an exit through a public offering is desirable as demonstrating cash-on-cash return is generally better than maintaining an illiquid holding, particularly when the company is facing the potential for down round funding to survive.  On the other hand, going public puts the unicorn’s financials in public view, and employees and private funds risk losing big if the company cannot sustain its predicted value.

Ultimately, a choppy IPO outlook for unicorns will lead to tightening of markets. As more unicorns linger and fall into distress, some will fail, leading to litigation.  Overly optimistic valuations lead to inflated expectations, especially those of employees expecting a payout and investors expecting gains.  Below are some types of disputes that can arise.

Employee claims: Employees paid in common stock may sue in the event of a dissolution or bad sale ahead of a public offering.  As in the case of former unicorn Good Technology, a bad sale may involve a payout on the common stock that amounts to only a fraction of its estimated value.  Employees of Good Technology (who held common shares) filed claims asserting that the company’s board breached its fiduciary duties by approving the sale.  They alleged that the board (whose members represented funds that owned preferred shares) favored the preferred over common shareholders.  While the case has been slow to progress, its outcome will inform the market whether such suits will provide viable recourse when employee shareholders believe their interests have been disadvantaged.

SEC Scrutiny: As we’ve previously noted, valuation-related regulatory risks increase as the time lengthens between purchase and exit. The SEC’s exam and enforcement staff have been focused on valuation of privately held companies for years. Further, the SEC sees itself as a protector of investors, even when those investors are employees of a private startup.   We are likely to see a disclosure case against a pre-IPO issuer relating to Rule 701 under the Securities Act.  That rule requires disclosure in certain circumstances of detailed financial information to employees in connection with certain stock or option grants.  This would lead to a spillover effect for funds that have supported those companies.

Claims arising in an acquisition: If the company is fortunate enough to reach some liquidity in a private sale, the acquiring company may pursue litigation against the board or other investors. The buyer may later allege fraudulent inducement and breach of contract on the grounds that the company and its investors misrepresented the company’s value.  In addition, investors can often break even in a merger by holding preferred shares with liquidation preferences.  However, like employees, investors still may sue the board or the company to try to recover a better return on their investment.

Fund LP/GP disputes: Unicorns are no different than other portfolio companies, in that when they fail, there may be disputes between a fund’s GP and its LPs. Those claims may vary.  For example, the fund’s designee on a failed unicorn’s board of directors will typically owe fiduciary duties to both the portfolio company and the LPs.  An LP may allege that the board representative favored the interests of the company over the interests of the LPs, or failed to adequately address or disclose concerns raised to the board level.  Furthermore, LPs may allege that the fund manager failed to address the potential for conflicts between the adviser and the funds.

While unicorns can generate extraordinary returns for early investors, they may also carry increased litigation risk even when they are successful. In addition, as more unicorns linger and fail to achieve successful exits, there is a higher likelihood that investors or employees will seek to recoup losses through litigation.  Fund managers should keep in mind the potential for these conflicts before a unicorn stumbles.  Addressing these relationships at early stages of the investment can help minimize litigation risk.