Pre-IPO stocks Q2 update
"The best early-stage venture capital investments appear obvious in retrospect; however, very few of them are actually obvious when you make them." – David Sze.
Market sentiment
Venture capital activity has remained robust in Q2 2024, though there's been a slight dip from the peak levels observed in Q1. Despite this, the market is experiencing increased liquidity, thanks to more active buyers, resulting in tighter spreads compared to the same period in 2023. Trade volumes have stabilized around the $10M mark across bids and offers, with significant transactions exceeding $50M resurfacing. However, closed trade volumes continue to exhibit volatility.
Key Highlights
Slight Dip in Activity: The slight decline in activity from Q1 is not indicative of a slowdown but rather a normalization following an exceptionally high period.
Heightened Liquidity: The participation of more active buyers has led to tighter spreads, making the market more liquid than in the same period last year.
Stabilized Trade Volumes: Trade volumes have stabilized around $10M, signaling steady investor interest. Notably, transactions over $50M have resurfaced, indicating confidence in larger deals.
Volatile Closed Trade Volumes: Despite the general stability, closed trade volumes show volatility, reflecting the complex dynamics of finalizing deals in the current market.
Market Dynamics
Active Buyers: The influx of more active buyers drives liquidity, helping maintain robust activity levels despite the slight dip from Q1.
Tighter Spreads: Compared to Q2 2023, the spreads are tighter, suggesting a more competitive market environment with better pricing for both buyers and sellers.
Significant Transactions: The resurgence of transactions exceeding $50M positively indicates investor confidence in substantial, high-value deals.
While Q2 2024 has seen a slight reduction in activity from Q1, the venture capital market remains healthy with significant liquidity and stabilized trade volumes. The presence of active buyers and the resurgence of high-value transactions underscore the market's robustness, though the volatility in closed trade volumes suggests ongoing challenges in deal finalization.
We thank portfolio company ApeVue for some of the market insight reported above.
Companies that did well
Epic Games - Positive news flow coming from the legal battle against Apple.
Kraken - There is a better tone in crypto, and the company is doing well in the news.
SpaceX - New tender, higher valuation, and positive news from the launch business.
Boxabl - Started a new RegA+ fundraiser and claims to have received over $10 million of interest already.
For more information, please read the private markets Q2 report
What is IPO CLUB
We are a club of Investors with a barbell strategy: very early and late-stage investments. We leverage our experience to select investments in the world’s most promising companies.
Disclaimer
Private companies carry inherent risks and may not be suitable for all investors. The information provided in this article is for informational purposes only and should not be construed as investment advice. Always conduct thorough research and seek professional financial guidance before making investment decisions.
