In this newsletter dedicated to private assets, we take a deep dive into late-stage VC backed companies thanks to Morningstar PitchBook Global Unicorn Index series insights.
Marlene Hassine Konqui
Ahmed Khelifa, CFA
Expert in portfolio construction Co-head of the SFAF ETF commission Associate Director General BSD Investing
Asset allocator Co-Head of the SFAF ETF commission CEO L’allocataire
The explosive growth of private markets has been one of the most significant developments in capital markets in the last two decades. More money is being raised in private markets than in public markets each year. This trend may be challenged by the current high-interest rate environment and lack of liquidity.
How late-stage VC backed companies performed in 2023 compared to public companies? How their valuations and growth evolved?
In this article, we take a deep dive into late-stage VC backed companies’ segment and geography.
Private market investing entails some noteworthy challenges. For instance, analyzing returns is problematic, owing to stale pricing that arises from relatively illiquid trading.The task is further complicated by the difficulty of calculating correlations between private and public asset returns. Also, volatility is a poor proxy for risk in PMs. Rebalancing is harder to implement than in public markets.Start-ups remaining in the private arena for longer periods may be convenient for entrepreneurs and profitable for venture capitalists, but it comes at a cost to investors and undermines the principle of equal access to information upon which robust securities markets are based.
What’s coming next for Private Assets Markets? How to paint a more complete picture of today’s investment landscape, and provide a better sense of where markets may be heading?
Underpinned by data from PitchBook, a leading provider of private-market data and research and an independent subsidiary of Morningstar, the Morningstar® PitchBook® Global Unicorn Indexes: “Harnessing Unicorns: Demystifying the venture capital market” provide insight into what’s happening just over the horizon of the public markets in the late-stage VC market.
In 2023, investors grappled with higher borrowing costs and heightened geopolitical risk.
Late-stage venture-backed companies have encountered major obstacles as a result of decreased deal activity and a stagnant exit environment, both of which greatly impact valuation and performance. Businesses with limited cash reserves have struggled to secure additional funding. What is the impact of the current tightening monetary policy environment and lack of liquidity on late-stage companies new deal flow? What was its impact on exits and firms runway?
The answers in this Unicorn Market Monitor: Q4 2023 wich provides a comprehensive overview of the late-stage VC market.
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Combining active & passive funds to build optimal portfolios
Click here to discover the performances of our dynamic portfolio allocation. Our mixed approach between active and passive management on this profile has generated an outperformance of 4% compared to the MSCI ACWI index (world equities) in 2023), and is up 22.1% against 18.1% for world equities. It is factual proof that the combination of active and passive strategies is an under-exploited performance driver.
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