Optimistic Private Markets, Pessimistic Public Markets

Morning Markets: What happened yesterday?

This week has brought a deluge of supergiant rounds and terrible public market performance.

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The contrast between the two sides of that coin was rarely in sharper relief than yesterday, when we discussed three recent nine-figure SoftBank investments and Pinterest’s impending IPO while the stock market itself fell down around us.

Some details on that latter point: Snap dipped under $5 per share before recovering some yesterday; Dropbox fell under its IPO price; Twitter swooned on an analyst downgrade; the Big Five gave up another few dozen billion in value, slumping to a shared market cap of $3.33 trillion, and on and on.

While, in the news, Swiggy raised $1 billion, JUUL sold $12.8 billion of itself, CMT picked up $500 million (one of the SoftBank rounds), the Wing raised $75 million this week, Graphcore raised $200 million, Vogo raised $100 million, and on and on.

Mind The Gap

What we’re seeing is sharp contrast between private market optimism and public market pessimism, almost. Why almost? Because there is a lag between the private market activity (closing a round) and that round becoming public (disclosure, reporting). That means we’re constantly looking into the past when we cover newly-announced private market activity.

What the public market does today, we can all see, but you can’t really grok today’s private market activity until it becomes public in a few weeks or months.

Or can you? Yesterday on Equity, Menlo Venture’s Venky Ganesan said that December was slowing on the late-stage venture front in terms of new activity. He’d know. So what we can say with certainty is that while it appears that there is a huge excitement gap today between buoyant private markets and anti-ebullient public markets, things could be closer than we might have otherwise guessed.

We’ll find out soon enough as December’s data trickles in, but I wonder if the impact of recent stock market jitters will more be felt in Q1, when the venture world gets back to work and looks around and notices that the Nasdaq is no longer over 7,000, and that the music could finally be slowing.

Illustration: Li-Anne Dias