Summer lull? Summer sell-off! Secondary activity shows continued sell-offs in August says ApeVue, continuing a rocky summer for venture backed startups. Has the bottom been reached?
The secondary market has seen investor appetite for new positions slow significantly as public market woes continue to impact the private sector. While VC funds continue to raise cash, they are waiting to deploy that capital as many LPs are becoming more particular around which companies to invest in. August saw a decrease in overall activity, likely to pick back up as we head into the fall.
The ApeVue 50, the equally weighted total return benchmark of the fifty most active names based on secondary market activity, rebounded slightly in mid-August but dipped lower again to finish the month. Month over month performance saw only a 1.39% decrease from July, giving indications that the bottom of private sector losses may have been reached. It is certainly too early to say for certain, as the ApeVue 50 heads into September -29.85% YTD, secondary investors will be keen to invest at discounts to prices in 2021 and early 2022.
Arctic Wolf activity heats up in August
Arctic Wolf is a Minnesota based enterprise cyber security company, initially founded in 2012. Coming off of a $150mm Series F in July 2021 at a $4.3B valuation, Arctic Wolf seemed to be gearing up for an IPO in early 2022, which did not come to fruition despite rumors. While this is still on the horizon for late 2022, ApeVue has seen secondary activity increase by a large magnitude this summer in this name.
In June through August, ApeVue has tracked Arctic Wolf’s share price hovering around $10, closing the month at $9.98. Increased secondary trading activity could indicate early investors seeking liquidity and selling stakes to buyers looking to get in on the promising company ahead of a public offering. Raising only ~$500mm in outside capital over 7 total funding rounds, the 146% increase in secondary market activity since July 1st that ApeVue has tracked could represent the first major liquidity event for early investors and employees. However things shake out, the low volatility seen in the share price has shown the firm's ability to weather a storm of tough market conditions.
Blockchain or Bust?
The ApeVue 50 Blockchain Sector struggled in H1 2022, with those struggles continuing into August. The sector, bolstered by well-known crypto/blockchain private companies such as FTX, Kraken, and Blockchain.com is now down 42.5% since inception (April 22), furthering losses observed earlier in the summer. This could be attributed to overall market conditions, however Blockchain/Web3/Crypto companies have certainly seen a higher pullback than other sectors.
ApeVue provides objective, daily pricing for non-public company stocks. Our independent data help institutional investors understand market conditions, measure risk and assign valuations with confidence. Price data from ApeVue are constructed from aggregated, anonymized market activity information sourced from licensed brokers at the nexus of institutional trading. Unlike traditional company valuation assessments done quarterly, ApeVue data show equity price fluctuations between funding rounds and regular financial reporting periods. With the largest, most timely, independent dataset covering non-listed companies, ApeVue is the best source for up-to-date insights about the dynamic pre-IPO company market.