Founder Interview with Idan Miller.
The Pre IPO secondary market will cross this year the $100bn markin total volume of trades turning this asset class to be one of the most growing sectors in the private equity space with the highest IRR.
However, despite its size, this market is highly inefficient, dominated by mediators, connecting buyers and sellers, using the same working methods used by real estate brokers 50 years ago.
Unicorns Exchange believes The market is in an urgent need of a transparent matching engine that will help buyers and sellers to connect and be able to close these trades much faster, without compromising on price and structure. And thus will soon release the first real-time and transparent Unicorns blocks Secondary Marketplace.By connecting a major part of the ecosystem players into a unified and fully transparent matching engine, Unicorns Exchange aims to create the largest database for late stage secondary transactions.
Despite the fact that the platform is still in Beta version, Unicorns exchange has closed nearly $100mm worth of trades and is getting ready for an official launch towards the end of the year.
Tell us about the types of assess classes that Unicorns Exchange focuses on.
Unicorns Exchange focuses on these asset classes:
● Venture-backed technology companies
● Late-stage companies: typically, Series E or later, $1+ billion valuation
● Mid-stage companies: typically, Series B through Series D, $200 million – $1
billion valuation
● Rapidly growing companies with high press presence
We have access to more than 250 private technology companies on our platform, at
ticket sizes from $500,000 to $200 million.
Share with us about Unicorns Exchange’s matchmaking process between buyers and sellers, and about your Dynamic Profiling Algorithms.
The platform was designed to serve all the different players in the industry ecosystem. Buyers, sellers and Mediators. When a partner uploads a buy/ sell order he/ she is required to add as much details about the order (volume, class of shares, structure, ask/ bid price and any other parameter that will enable the system to find matching supply/ demand.
After the order have been submitted, the partner will define who’s going to be exposed to that order (from a wide approach that will expose the order to all the platform users and up to a narrow approach that will limit the exposure only to partner who currently have matching orders uploaded to the platform)
After the partner uploads an order, our Dynamic Profiling Algorithms (which is based on machine learning & AI) analyze, score and suggest the most appropriate matching orders in order to reach the highest probability to close deals. The matching orders contain all the information about the matched bid/ ask apart from the name of the seller/ buyer.
Each order contains a “Connect me” button. When clicking CONNECT ME, Unicorns Exchange will automatically contact the matching order’s partner, get the partner’s consent and connect both partners directly to negotiate a deal.
The major benefits to the network partners include a remarkably faster and more successful deal closing. Using our Secure Smart Permission System and based on our Dynamic Profiling Algorithms, we dramatically improve the matchmaking process and the chances to close deals.
During the last decade, secondary transactions showed the highest IRR in all private equity strategies. What in your opinion are the main reasons for this?
The secondary market has been influenced by many changes. More companies are staying private for a longer period. The average road to IPO is 13 years (20 years ago it was 5+ years). On top of that, locked value created by private companies has increased significantly. Secondary market reached a record of $87BN in 2019 (setter capital, Feb 2020). During the last decade, secondary transactions showed the highest IRR in all private equity strategies.
The reason Pre IPO investments showed the highest IRR in all private equity strategies (and in many cases better IRR than many public equity strategy as well) relates to the fact that the majority of the companies in the Pre IPO space are very mature on the one hand (proven business models, high growth ARR, leading positions in their space) while the fact that they are yet to go public leaves their valuation matrixes in the hands of the major VCs who gradually increase the valuation from round to round, leaving a room for a massive valuation bump in the 12-18 months window before the IPO.
A great example of this phenomenon can be seen in the last 3-4 months.
During H2 2020 more than 50 tech companies are expected to go public on NASDQ.
From June on, we’re seeing a massive ramp up in prices of almost any company that announced an upcoming listing (sometime 100% and more in less than 3-4 months) or that the market predicted a closed by listing process in.
What is your company’s vision?
Working in this space for the last couple of years, partnering with hundreds of buyers, sellers and many other mediators, it became clear that this market is in an urgent need of a good matching engine that will help buyers and seller to connect and be able to close these trades much faster, without compromising on price and structure.
Unicorns Exchange’s vision is to become the leading Unicorns’ Secondary Marketplace that matches between Buy and sell orders of mid to late stage VC backed privately held companies’ shares. By connecting a major part of the ecosystem players, we’re creating the largest database for late stage secondary transactions.
How can our readers get involved?
The Pre IPO unicorns’ space is growing rapidly year by year over the last decade.
But during 2020, the corona year, it reaches a new highest.
We welcome your readers to start exploring investment opportunities in our space and add this asset class to your ongoing portfolio opportunities.
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