ApeVue-April 2023 Month in Review
ApeVue April 2023 Recap:
Private markets re-engaged their descent in April, as observed by ApeVue. The most active 50 names in the late-stage secondary market recorded a 4.17% decline for the month. The worst performing sector of the year remains focused on Entertainment names, with constituents like Bytedance, Discord, and Epic Games, leading the sector lower.
April Recap (2023 YTD Returns Update):
ApeVue 50: -4.17%
ApeVue 50 Data: 2.65%
ApeVue 50 Financial: -8.99%
ApeVue 50 Entertainment: -19.37%
ApeVue 50 Blockchain: -3.53%
ApeVue 50 Food: 6.35%
Private Markets saw persisting stress in April, as large private companies continue to face tough economic conditions. Companies are struggling to raise capital as VC investors are increasingly wary about providing funding at the high valuations these companies commanded in previous years. In fact, there are more than 400 unicorns who have not raised additional capital since 2021, and when they do, ApeVue index data are signaling an increased likelihood of down-rounds between ~30% (for many which raised in 2022) and ~70% (for those which raised at peak 2021 valuations).
Comparing ApeVue’s market-driven figures to Carta, down-rounds in Q1 2023 quadrupled when compared to the same period last year, with 18.7% of rounds they observed being down-rounds. There are only 4 newly minted Unicorns in April 2023 according to CB Insights:
Scroll - $1.80
Adept - $1.00
Character.AI - $1.00
Kindbody - $1.80
Source: CB Insights
The secondary market saw a widening bid/ask spread on activity following the collapse of Silicon Valley Bank, but has since tightened. Many secondary market investors are looking to capitalize on the fact that private company shares can be acquired for a discounted price when compared to last round. However, this is also at odds with sellers, current investors and employees at these companies, who have struggled to come to terms with the reality that their shares are simply no longer worth what they were in 2021/2022.
ApeVue Observed Bid-Ask Spread (in %)
ApeVue expects a continued bid-ask spread tightening, given much of the spikes observed in recent months were around the panic surrounding SVB, Signature Bank, and Credit-Suisse. The current Bid-Ask spread observed on the most active secondary names (QTD-2q2023) is 10.8%.
Top 10 High-Volume Names (by Bid:Ask Ratio)
The weightings of bid-ask volume has also been an indicator for performance, naturally with the less balanced names typically underperforming those which have a higher degree of bid volume (and general two way liquidity).
ByteDance Financial Results:
Despite ongoing US regulatory pressure, specifically concerning the potential ban of TikTok, parent company ByteDance announced record profits in their 2022 results last week, as reported by investors. The key results, highlighted by The Economist and Financial Times, are as follows:- EBITDA: Increased by 79% YoY to $25bn in 2022- 150 million users in the US alone- ByteDance's international business (including TikTok): $15bn in sales- China revenues: $70bnApeVue has noted significant institutional activity in ByteDance, with over $2bn in Sell Indications and more than $1bn in Buy indications in the last month. With a composite price of just under $140/share, the question remains: will ByteDance continue to attract additional institutional investors in spite of the looming regulatory concerns?
Airtable Competition Heats Up:
Airtable, the no-code database and connected apps platform, secured $735 million in funding during its 2021 Series F, achieving an impressive $11 billion valuation. Following the trend of many other tech companies that raised substantial capital in recent years, Airtable unfortunately laid off 250 employees, including multiple senior executives, this past December. Additionally, Airtable now faces stiff competition from various up-and-coming contenders, ranging from startups to well-established tech giants.
Some notable challengers include Baserow, APITable, NocoDB, and even Google's new "Tables" product, which has been in beta since 2020. Many of these competitors are open-source, aiming to capture market share as low-code solutions gain popularity among less technical employees at firms eager to develop and deploy software and establish connectivity between apps.
Since the start of 2023, Airtable's performance has lagged behind the ApeVue 50 and ApeVue 50 Data private market benchmarks, as illustrated in the graph below.
Anduril Industries Review:
Anduril Industries, the American defense-tech unicorn founded by Palmer Luckey, has remained stable in private markets in recent months. After raising $1.48 billion in fresh funding (Series E) late last year, the firm was valued at nearly $8.5B. The second largest raise in 2022, Anduril has been using the funds to expand their product offering and has since partnered with the Royal Australian Navy to build autonomous submarines.
A few highlights from CEO Palmer Luckey below:
- Closed a 10-year $967M contract to be U.S. Special Operations Command’s Systems Integration Partner (SIP) for counter-UAS (cUAS) technology.
- Acquired Dive Technologies, a pioneer in autonomous underwater vehicles (AUVs), expanding Anduril’s suite of autonomous systems and extending its unmanned capabilities to the undersea domain.
- Expanded to Australia, with an independent entity, Anduril Australia headquartered in Sydney to advance and grow a broad Australian industrial network and develop advanced defense technologies in partnership with the Australian Defence Force and Australian government.
- Signed a $100M contract for a co-funded design, development and manufacturing program for Extra Large Autonomous Undersea Vehicles (XL-AUVs) with the Royal Australian Navy.
- Nearly doubled the team size, from 700 at the start of 2022 to more than 1100 employees today.
ApeVue has a current composite price for Anduril of $17.51, above the $16.52/share Series E, which indicates an implied valuation of nearly $10B. This is good news for Anduril investors, as well as other defense-tech startups as VCs and governments alike invest into the industry as global tensions continue to rise.
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