GIH – Private Markets are seeing mixed results going into the summer of 2024, while investors wait on a clear signal from the Fed, and a resolution for US Political Leadership.  As readers of this site are well aware, markets are controlled by 2 important forces: Fed Monetary Policy and DC Policy and Regulation, mostly led by the White House Administration.  While everyone is aware how obviously the Fed impacts markets with interest rates, creating or destroying M3, and other financial levers the Fed has; less are aware of how White House policy can impact markets and the US Dollar (and it’s not just the economy).  War has far reaching implications for the US Dollar too many to delve into here, but it’s an important factor.  For example, the US Dollar used to be the largest non-RUB currency used in Russia and CIS countries before the Ukraine war, and now it has been replaced by the Chinese Yuan.  Russian ex-pats in Dubai, London, Thailand, Spain, and other places will probably choose a currency other than the USD, even if they do not agree with their President’s policies, it’s just the nature of things.  War is a business, and it’s not only about bombs, it’s about “Banks, not Tanks.”

Venture Capital Cross monitors trends in Private Markets and is seeing mixed signals, but with an overall positive note.  According to ZX Data [1]:

Based on $175bn+ buy/sell interest and $18bn+ executed volume covering more than 1,000 private companies.

• Market Performance: ZX Equal-Weighted Index increased 1.3% MoM.
• Bid/Ask Spread: In April,  the average bid-ask spread was 14%, (5% lower than the 12-month average). 
• Bid/Ask Ratio: Bids represented 40% of submitted tickets in April.
• ZX Index Values ended the month, on average, 26% lower than last round price per share.
• Cerebras, SpaceX and Stripe were the three most active companies on ZX in April.

These indicators signal a positive shift in market dynamics and enhanced liquidity, reflecting increased market confidence and improved trading conditions and further support a positive trend, indicating a growing demand for private market securities.

While overall the tone seems positive, there were more sell orders entered than buy orders, and the Bid/Ask ratio is slightly trending down.  During the peak around 2021 the ratio was near/around 75% buyers 25% sellers.  This is a broad index, however, investors should note that typically private markets are one sided (there are all buyers or all sellers) for a single name.

The Fed has said and the market agrees they are going to eventually lower rates, the debate is when and by how much.  US Foreign Policy can play a big role as well, with a more Pro- Domestic US policy that can support the dollar and tamper inflation.

For Accredited Investors only – To access early stage investments along side Tier 1 VCs, checkout DT Unicorn Fund.  For direct investments in Unicorns like Stripe, Cerebras, and others – checkout Venture Capital Cross.

[1] ZX Data is a private markets professional data services offered by Zanbato.   To learn more or get a demo visit https://vccross.com/services/prodata