Tech investors have grown increasingly bullish about the companies they fund over the last six months, even after a series of much-anticipated IPOs proved to pack more fizzle than pop in 2017.
Most tech investors think the industry’s companies are about to grow even more valuable
Less than half of investors said the same thing at the end of 2016.
Sixty-eight percent of investors told SharesPost, an industry research firm, that valuations for private companies will increase over the next 12 months. Only 49 percent said the same six months ago.
That’s despite the stock market’s unhappiness with new publicly traded tech companies like Snap and Blue Apron, whose shares have fallen below their initial IPO prices.
Gallons of available cash in venture capital have sent valuations for privately held companies skyrocketing lately, which may partly explain the uptick. Investors, of course, are inclined to predict high valuations for the companies they invest in (and that bring home cash for their firms), but that doesn’t wholly explain the change in sentiment here versus six months ago.
SoftBank’s latest Vision Fund, for instance, is playing with $100 billion — a reminder of the big appetite these days for tech investments.
The other figure that stands out from this survey: Investors are growing increasingly comfortable with secondary transactions, in which buyers can purchase existing shares from existing shareholders — even though the companies are private. Some in Silicon Valley view these trades as unreliable or perhaps even unsavory.
But now only 11 percent of investors describe these secondary shares as an unattractive asset class; twice as many respondents (23 percent) gave them a thumbs-down at the end of 2016.
We should note the sample size here is somewhat small — only 350 respondents for what SharesPost said is a margin of error of below six percentage points.
This article originally appeared on Recode.net.
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