MUTUAL FUND MARKDOWN 25 - Vista Equity...
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A CLOSER LOOK AT INVESTMENTS IN THE SOFTWARE SECTOR IPO ACTIVITY 11 OF 49 MANEUVERING TECHNOLOGY EVENTS What do investors look for when considering whether to fund a business? There’s more at play than your elevator pitch and how you plan to carve out a unique position in the market. Your knowledge of the market conditions that could affect a would-be partner’s appetite for investment also plays an integral role in your fundraising success. With increased market volatility, IPOs are one of the riskiest securities. In fact, the stock market is giving many of Silicon Valley’s most promising startups a lackluster reception. If this continues, private companies could begin to feel the fallout of these events, making it difficult to recruit and pay employees, as well as threaten their future interest in startup funding. 401 Congress Avenue, Suite 3100, Austin, TX 78701 | 512.730.2400 | [email protected] | VistaEquityPartners.com Vista Equity Partners Management, LLC (“Vista”) is an SEC registered adviser. This document is intended to provide general information regarding Vista. Under no circumstances should the information provided be considered an offer to sell, or a solicitation to buy, any security. Such offer or solicitation may only be made pursuant to the current offering documents of the relevant Vista Fund. The information provided is strictly confidential and may not be reproduced or disseminated without the written consent of Vista. The past performance of previous Vista Funds and portfolio companies is not necessarily indicative of future results ©2016 Vista IPOs are appealing for investors who believe the potential reward outweighs the incremental risk. GOING PUBLIC? Potential buyers demand better odds. HGOAX carrying preferred shares of 10 privately held companies below its original cost bases through June 2015. UNICORN TROUBLES 22 SOFTWARE UNICORNS Unicorns are highly sought after by investors for their growth prospects, management, and market value of assets. But often, by the time a company is ready to go public, the valuation it received from venture capitalists does not align with its balance sheet. The success, or failure, of these giants has great influence over the market, and the tech bubble that looms over it. have a combined valuation of nearly $40 billion $63.5 BILLION in unicorn IPOs alone, if unicorn companies float 25% of their private valuation through IPOs over the next two years. 14% HIGHER than the average total volume of IPOs, regardless of sector, over the last two decades. MUTUAL FUND MARKDOWN Mutual fund markdowns have surprised the venture community. Venture capitalists value companies at what they paid for them; but recently, investors have been discounting their companies after subsequent review of market conditions and performance. These markdowns indicate uncertainty from investors and may stagnate the growth of this fast-growing market. Snapchat discounted CONCLUSION When looking for investment opportunities, investors may be hungry for software companies, but companies are competing with the best of the best. Here are some trends affecting the software industry. - 25 % - 31 % Dropbox devalued Source: The Wall Street Journal Sources: The New York Times and Dealogic *Source: Fortune VC-backed U.S. technology companies held IPO events traded below the per-share value in 2015 EARLY-STAGE M&A Activity is affected by interest rate increases and conflicting economic growth signals. Many fear the 5.6% growth in Q3 2015 is not sustainable. UNICORN RISK Will continue to rise in 2016, if the gap between pre-IPO and IPO valuations narrow. IT SPENDING PROJECTED TO FLATTEN In 2016, resulting from revenue pressures from multiple industries. Cuts may occur to alleviate resources for other initiatives, like software application. MARGINS & CASH FLOW Companies with high results will receive firmer valuations. Businesses rooted in cloud and Saas need to define a differentiating feature of their software to pull ahead of the competition. DIFFERENTIATING FEATURE READ MORE INSIGHTS FROM TOP VISTA LEADERS
Transcript of MUTUAL FUND MARKDOWN 25 - Vista Equity...
A CLOSER LOOKAT INVESTMENTS IN THE SOFTWARE SECTOR
IPO ACTIVITY
11 OF 49
MANEUVERINGTECHNOLOGY EVENTSWhat do investors look for when considering whether to fund a business? There’s more at play than your elevator pitch and how you plan to carve out a unique position in the market. Your knowledge of the market conditions that could a�ect a would-be partner’s appetite for investment also plays an integral role in your fundraising success.
With increased market volatility, IPOs are one
of the riskiest securities. In fact, the stock
market is giving many of Silicon Valley’s most
promising startups a lackluster reception. If this
continues, private companies could begin to
feel the fallout of these events, making it
di�cult to recruit and pay employees, as well as
threaten their future interest in startup funding.
401 Congress Avenue, Suite 3100, Austin, TX 78701 | 512.730.2400 | [email protected] | VistaEquityPartners.com
Vista Equity Partners Management, LLC (“Vista”) is an SEC registered adviser. This document is intended to provide general information regarding Vista. Under no circumstances should the information provided be considered an o�er to sell, or a solicitation to buy, any security. Such o�er or solicitation may only be made pursuant to the current o�ering documents of the relevant Vista Fund. The information provided is strictly confidential and may not be reproduced or disseminated without the written consent of Vista. The past performance of previous Vista Funds and portfolio companies is not necessarily indicative of future results ©2016 Vista
IPOs are appealing for investors whobelieve the potential reward outweighs
the incremental risk.
GOING PUBLIC?Potential buyers demand better odds.
HGOAX carrying preferred shares of 10 privately held companies below its original
cost bases through June 2015.
UNICORN TROUBLES
22 SOFTWAREUNICORNS
Unicorns are highly sought after by investors
for their growth prospects, management, and
market value of assets. But often, by the time a
company is ready to go public, the valuation it
received from venture capitalists does not align
with its balance sheet. The success, or failure, of
these giants has great influence over the market,
and the tech bubble that looms over it. have a combined valuation of nearly $40 billion
$63.5 BILLIONin unicorn IPOs alone, if unicorn
companies float 25% of their private valuation through IPOs
over the next two years.
14% HIGHERthan the average total volumeof IPOs, regardless of sector,over the last two decades.
MUTUAL FUND MARKDOWNMutual fund markdowns have surprised the
venture community. Venture capitalists value
companies at what they paid for them; but
recently, investors have been discounting their
companies after subsequent review of market
conditions and performance. These markdowns
indicate uncertainty from investors and may
stagnate the growth of this fast-growing market.Snapchat discounted
CONCLUSIONWhen looking for investment opportunities,
investors may be hungry for software
companies, but companies are competing
with the best of the best. Here are some
trends a�ecting the software industry.
-25% -31%
Dropbox devalued
Source: The Wall Street Journal
Sources: The New York Times and Dealogic
*Source: Fortune
VC-backed U.S. technology companies held IPO events traded below the per-share value in 2015
EARLY-STAGEM&A
Activity is a�ected by interest rate increases and conflicting
economic growth signals. Many fear the 5.6% growth
in Q3 2015 is not sustainable.
UNICORNRISK
Will continue to rise in 2016, if the gap between
pre-IPO and IPO valuations narrow.
IT SPENDING PROJECTEDTO FLATTEN
In 2016, resulting from revenue pressures from multiple industries. Cuts may occur to alleviate resources for other initiatives,
like software application.
MARGINS &CASH FLOW Companies with high
results will receive firmer valuations.
Businesses rooted in cloud and Saas need to define a di�erentiating feature of
their software to pull ahead of the competition.
DIFFERENTIATINGFEATURE
READ MORE INSIGHTS FROM TOP VISTA LEADERS
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