The Venture Capital asset class of the Silicon Valley hi-tech market, like Wall Street, is well-established, and have the size, performance, and vibrancy that is unequal in the world. The Market is Buoyant! “Venture-backed and privately-held hi-tech companies have doubled funding and deal volume in the last five years,” according to a recent CB Insight report. This asset class is driven by Venture Capital Firms that are motivated to capture the benefits of hi-tech startups, which make for strong EXITS and RETURNS.
Venture-backed startups are taking much longer to reach an IPO or other exit events. Founders, Investors, and Employee shareholders currently wait 7+ years for their companies to reach an IPO. During that time stock option assets are illiquid, albeit the private valuation of these companies have increased into the billions. This trend has given rise to a vibrant Secondary Market in which these entrepreneurs seek liquidity to unlock the value of privately-held shares. Their need for cash is driven by a range of personal needs, including paying taxes, buying a home, and paying school tuition.
The value of Second Market transactions for privately-held share in Silicon Valley tech companies has risen from millions to billions of dollars. This trend has created opportunities for non-traditional Investors to gain late-stage access to shares in marquee Silicon Valley hi-tech companies. Investors can acquire pre-IPO shares, at pre-IPO price valuation, in privately-held companies that are approaching an exit event. Investors can now bolster their portfolio with shares for a range of next generation, wealth creation companies, at a lower risk profile and a promising projected returns.