Public Market Investors and Private Companies

public markets private companiesGlenn Solomon of GGV Capital offers some good insights into the rise of hedge funds and mutual funds in his article on TechCrunch here.  This is definitely an increasing trend.

Some additional thoughts on this:

  • Most founders don’t have to think about hedge funds as a funding source. They’re not doing seed/early stage deals. There are 300-600 private companies that hedge funds track and care about. It’s later stage, pre-IPO companies.
  • GGV Capital (the author’s firm) is a late stage investor so they may compete with hedge funds, but more often than not, hedge funds are providing capital that VCs cannot. Hedge funds are a much much larger asset class than VCs and VC has been contracting. So when a VC-backed company needs big $$, VCs need to syndicate and corporates and hedge funds are often jumping into these deals.
  • This trend is going to increase. As private companies stay private longer, hedge funds and public market investors in general are taking more interest in the private company universe. And they look at private compnaies as investment targets and as potential disruptors of their public company holdings.
  • Hedge funds are a great deal more data-driven and analytical than their VC cousins. VC is still very artisinal and instinct driven. It will be interesting to see how their behavior and approaches influence VCs, if at all, over time. (We sell data to hedge funds investing in private companies and so see how they use data)

Leave a Reply

Your email address will not be published. Required fields are marked *

Post Navigation