Firsthand Technology Value FundNASDAQ
Dec. 31, 2015, 4:14 PM
- Though the Nasdaq fell 1.2%, Late-stage VC investors GSV Capital (GSVC +1.8%) and Firsthand Tech Value Fund (SVVC +5.1%) ended 2015 on a high note. The firms respectively saw 186K and 79K shares traded vs. 3-month daily averages of 118K and 28K.
- GSV still trades at a 40% discount to its estimated Q3-ending NAV of $15.72/share - a liquidity discount (due to the fact most of its assets are in private companies) could be a factor, as might the gap that has opened up between private and public valuations for growth-stage tech companies. Its top holdings at the end of Q3 were Palantir (15.6% of portfolio value), Dropbox, Twitter, Coursera, solar panel manufacturer Solexel, and payments startup PayNearMe.
- Firsthand trades at a 64% discount to an estimated Q3-ending NAV of $23.20/share. Its top holdings are medical device maker IntraOp (14.9% of net assets), chip equipment maker Pivotal Systems (12.8%), ad tech firm Turn, electronics materials startup QMAT, and electric drivetrain supplier Wrightspeed. The company also owns a ~$4M stake in converged data center infrastructure provider Nutanix, which recently filed for an IPO.
Oct. 11, 2015, 7:19 PM
- "Since landing in San Francisco on Wednesday, I’ve met with an assortment of senior venture capitalists, bankers, entrepreneurs and crossover investors," writes Fortune's Dan Primack in a recent column. "All of them have, in one way or another, been involved with so-called ‘unicorn’ companies. As in the past, they are nearly unanimous in sentiment. The difference now is that their sentiment is fear."
- With the Nasdaq having swooned in recent months (companies with steep multiples and/or heavy cash burn have been especially hard-hit) and several prominent tech IPOs trading below their offering prices, many of the investors who who poured money into dozens of private tech companies at $1B+ valuations are becoming more cautious.
- An unnamed tech banker: "This shift is only five or six weeks old, so most companies haven’t felt it yet. But I know of many companies who raised money at $1 billion valuations last year that are now being told that, to raise money now, they need to take around $700 million or $800 million."
- The ranks of private tech companies sporting $1B+ valuations (the proverbial unicorns) has exploded over the last three years, with much of their funding coming from non-traditional sources. UBER ($51B valuation), Airbnb (AIRB - $25.5B), Palantir ($20B), Snapchat ($16B), Flipkart (FPKT - $15B) are among the most high-profile unicorns.
- Publicly-traded investors in private tech companies: GSVC, SVVC, TINY
- 8 months ago: VC Gurley argues fear of missing out leading startup valuations to soar
Feb. 22, 2015, 6:54 PM
- "You don’t want us to invest in this but the big tech stocks are not delivering enough growth and my competitors are getting into these startups, so what are we supposed to do?," big-name VC Bill Gurley rhetorically asked at a Goldman conference while discussing soaring valuations for late-stage startups. He suggested FOMO, or a fear of missing out, is driving valuations into the stratosphere.
- There are now 73 private tech companies with $1B+ valuations (per the WSJ), up from 41 a year ago. Prominent names include Uber ($41B+ valuation), Xiaomi ($45B+ valuation), and Palantir ($15B valuation).
- Gurley, a partner at Benchmark, argues investors are pouring funds into such companies in a manner typically reserved for public companies that have provided detailed regulatory filings and financial data, and that many of them (mutual funds, hedge funds, etc.) are new to VC investing and don't fully grasp the risks involved. "This replaces the IPO — but not all these companies are IPO level candidates,” he said. “Would you hand a teenager $200,000?"
- The fervor doesn't seem to be letting up: Over the last week, Bloomberg has reported of a potential $19B valuation for Snapchat, and the WSJ has reported of a potential $11B valuation for Pinterest.
- Publicly-traded investors in late-stage tech startups: GSVC, SVVC
- Two months ago: Barron's argues today's bubble is in private tech markets
- Four months ago: VCs (including Gurley) raise alarm bells about private valuations
Jan. 23, 2015, 3:58 PM
- The Firsthand Technology Value Fund (SVVC -6.5%) saw 4.92M shares (57.5% of its outstanding shares) tendered through an offer to buy $20M of them at a price equal to 95% of a Dec. 31 NAV of $24.495/share; that translates to an offer price of $23.27/share, and the purchase of 859K shares.
- With the number of tendered shares well above the number Firsthand has committed to buying, the fund will acquire tendered shares on a pro rata basis.
- Firsthand currently trades 29% below its Dec. 31 NAV. GSV Capital can relate.
Oct. 4, 2014, 3:03 PM
- The number of U.S. tech startups receiving $1B+ valuations in their first financing round rose 133% Y/Y in 1H14, says CB Insights. Meanwhile, PriceWaterhouseCoopers estimates the amount of VC funding directed towards "software" companies (includes a lot of Internet-related funding) totaled $10.1B in 1H14, up from just $4.6B a year earlier. Uber's $1.2B funding round (at a $17B valuation) helped boost PwC's figure.
- The breakneck investment pace has led a slew of high-profile VCs to warn valuations have gotten stretched, if not suggest a fresh bubble is afoot. Kleiner Perkins' Randy Komisar: "There's too much capital and there's very few places to invest it ... risk is not being priced properly and so venture capitalists are taking high-risk, high-reward bets."
- "No one's fearful, everyone's greedy, and it will eventually end," declared Benchmark's Bill Gurley in a recent WSJ interview. "I think that Silicon Valley as a whole or that the venture-capital community or startup community is taking on an excessive amount of risk right now. Unprecedented since '99."
- For their parts, Marc Andreessen and Fred Wilson have warned startups to curb their spendthrift ways. Andreessen: "When the market turns, and it will turn, we will find out who has been swimming without trunks on: many high burn rate co's will VAPORIZE."
- Nonetheless, contrasting views remain easy to find. Menlo Ventures' Venky Ganesan: "While we are in an up cycle, we are nowhere close to the top ... There are pockets of irrational exuberance, but for the most part, I think it's actually fine."
- Internet/social media ETFs: FDN, PNQI, SOCL
- Investors in late-stage startups: GSVC, SVVC
- Yesterday: Yahoo reportedly set to invest in Snapchat at $10B valuation
May 2, 2014, 11:05 AM
- Under pressure from Phil Goldstein's Bulldog Investors, Kevin Lanids' Firsthand Technology Value Fund (SVVC +10.6%) agrees to repurchase up to $10M of stock in the open market this year and to tender for at least $20M of stock at up to 95% of NAV by the end of next January.
- Bulldog agrees to withdraw its board nominees and to stop fighting to end the fund's investment management agreement.
- Previous: An Open Letter from Bulldog Investors
- Is GSV Capital (GSVC +1.5%) next? As of his January 9 letter to Firsthand, Goldstein was long that name as well.
Apr. 17, 2014, 6:15 PM
- "We're obviously in the throes of what feels like a correction for the small-cap and growth-equity companies," says Revolution Ventures managing partner David Golden.
- Following a Q1 that saw the highest level of U.S. VC investment since 2001 ($10.7B, up from $9.1B in Q4 and $7.5B a year earlier ), as well as a handful of late-stage deals featuring eye-popping valuations (Airbnb, Dropbox), a rapid selloff in high-beta tech stocks is yielding a sense of caution.
- Accel Partners' Jim Breyer (an early Facebook investor): "Not a board meeting goes by when at least half the meeting isn't spent on financial strategy." Venrock's Nick Beim: "We all feel like we're at the top of the cycle, and everyone's skating on new ice ... Just how thin the ice is not yet clear."
- GSV Capital's (GSVC) Michael Moe, whose firm often takes positions in late-stage startups, likes what he sees. "I think prices will get more favorable for buyers because it will be more difficult to do megadeals at megavaluations." The Firsthand Tech Value Fund (SVVC) might also get more favorable terms.
- Today's tech IPOs - Weibo and Leju - each delivered solid gains, but only did so after pricing their offerings at the low end of their respective ranges.
Mar. 26, 2014, 4:04 PM
- Aided by King's poor debut and general momentum stock weakness, U.S. and Chinese Internet stocks have fallen hard for the second time this week.
- In addition to King rival Zynga and newly-minted VR headset maker Facebook, Twitter (TWTR -7.1%) is among the leading U.S. decliners. Exactly 3 months after reaching a peak of $74.73, shares have fallen below their post-IPO opening price of $45.10. They remain well above their $26 IPO price.
- Other U.S. decliners: P -5.2%. Z -6.2%. TRLA -7%. GSVC -4.8%. SVVC -4.1%.
- Many Chinese Internet stocks have also been hit hard. Sungy Mobile (GOMO -23.2%), which posted a Q4 beat and in-line guidance yesterday afternoon, is the biggest decliner. Others: QIHU -8%. WUBA -9.5%. MOBI -10.6%. QUNR -7.8%. NQ -7%. YOD -7.6%. WBAI -7.5%. SOHU -7%. ATHM -6.5%. SFUN -6.3%.
- Internet/social media ETFs: FDN, PNQI, SOCL
Jan. 16, 2014, 12:11 PM
- Firsthand Technology Value Fund (SVVC -0.2%) reports a preliminary NAV of $28.31/share at year end, of which $9.17/share is cash. Total return on NAV in 2013 is estimated at 25.3%.
- The fund's top 5 holdings consisted of Twitter (21.2% of NAV), Facebook (12.8%), IntraOp Medical (7.9%), Turn (5.8%), and AliphCom (4.0%).
- Shares closed yesterday at an 18.3% discount to the Dec. 31 NAV, a discrepancy that activist Bulldog Investors criticized in an open letter earlier this month.
Jan. 9, 2014, 9:26 AM
- Activist shareholder Bulldog Investors issues a public letter to Firsthand Technology Value Fund (SVVC) asking some tough questions of the close-ended VC fund.
- 2 of several points of contention: 1) "Why has SVVC filed for a $150 million rights offering while it has more than $100 million in cash and its shares trade at a discount of more than 20%?" 2) "SVVC converted from an open-end fund to a closed-end fund in April 2011 when the stock price was $27. Since then, the market, and especially tech stocks, have risen significantly. Yet, SVVC's stock price has declined by over 10%. Why?"
Dec. 30, 2013, 1:15 PM
- GSV Capital (GSVC -5.1%) and the Firsthand Technology Value Fund (SVVC -4.1%), each of which have sizable Twitter positions, aren't being spared as the microblogging leader continues to sell off.
- As SA contributors have pointed out, GSV and Firsthand, each of which hold a number of positions in growth-stage private tech companies, trade at major discounts to NAV estimates. Illuminati Investments recently estimated GSV will have an end-of-Q4 of at least $16.96/share, and Ben Axler estimated last week Firsthand had an NAV of $31.30/share as of Dec. 26.
Nov. 7, 2013, 11:15 AM
- Were investors expecting too much? Even though Twitter opened sharply higher on IPO day (shares are now up 81% to $47.06), shareholders GSV Capital (GSVC -9.5%) and the Firsthand Technology Value Fund (SVVC -7.4%) are heading south. It's worth noting many other Internet momentum plays are also selling off.
- GSVC and (to a lesser extent) SVVC have been rallying due to Twitter IPO hopes. Twitter accounted for 15.1% of GSV's net asset value at the end of Q2; the company reports after the close.
Nov. 6, 2013, 6:47 PM
- Twitter's (TWTR) IPO price is above its $23-$25 range, but below the $27 the company's underwriters were reportedly aiming for. Shares begin trading tomorrow.
- Twitter raised $1.82B through its 70M-share offering. Based on common stock outstanding, the microblogging leader's IPO valuation stands at $14.2B. If one factors outstanding options and restricted stock units, Twitter's valuation is north of $17B. (S-1)
Nov. 4, 2013, 3:33 PM
- Bloomberg reports Twitter's (TWTR) IPO has been oversubscribed, and is likely to price above its just-elevated price range of $23-$25.
- GSV Capital (GSVC -1.4%), which has already rallied strongly this year thanks to Twitter-related hopes, is ticking lower today. But the Firsthand Technology Value Fund (SVVC +2.6%) is rallying.
- More on Twitter
Nov. 4, 2013, 9:15 AM
- Twitter's (TWTR) hike, which comes amid strong demand for its IPO and a general belief its initial price range of $17-$20 was conservative, means the company is now set to raise $1.61B-$1.75B (by selling 70M shares), and sport an IPO valuation of $12.5B-$13.6B. (S-1)
- Twitter shareholder GSV Capital (GSVC) is up 3.4% premarket on the news. The Firsthand Technology Value Fund (SVVC) might also trade higher.
Oct. 25, 2013, 11:50 AM
- Twitter (TWTR) shareholders GSV Capital (GSVC -2.3%) and the Firsthand Technology Value Fund (SVVC -4.1%) are selling off after the microblogging leader set an IPO price range that spells a valuation range of $9.3B-$10.9B, well below the $14B+ valuations that have reportedly been thrown around in private share offers.
- The fact Twitter's pricing is generally viewed as an act of caution meant to avoid a repeat of Facebook's IPO, rather than business pessimism, is probably limiting today's losses. Analyst Dan Niles: "Twitter is not going to price this thing to get every single dollar off the table ... They want to price it so the stock goes up on the first day, at least."
- Meanwhile, the NYT and CNBC both report Twitter plans to price its IPO on Wednesday, Nov. 6, which means shares would begin trading on Nov. 7. The WSJ previously reported Twitter was looking to price around Nov. 6.