The Takeaway
Understanding the behavior and accurate measurement of private markets is essential for maintaining trust and transparency among investors, thereby promoting a more stable and robust private equity market.
By leveraging unique datasets, modeling techniques, and market insights, the mark-to-model methodology offers a more holistic view of a unicorn's worth.
This valuation approach forms the foundation for Morningstar’s Global Unicorn Indexes, which will enable quantifying the potential risks and returns of private markets.
Changes in how private venture-backed companies raise capital to fund their growth has altered the nature of capital markets. The implication of these changes is enormous, as private equity allocations occupy a considerable share of institutional portfolios and are gaining popularity in retail portfolios, too. However, accurately measuring the returns and risks of late-stage venture investments can be challenging without the right tools. We introduce a new mark-to-model approach to value venture-backed companies. The model supports the creation of benchmarks that will provide more timely insights into the late-stage venture market and improve the understanding of the behavior of this market. Ultimately, it will aid in making better decisions regarding asset allocation and portfolio construction.
Growth of Unicorns by Number and Assets
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