Table of Contents

Private markets saw a sharp slowdown in secondary trading as bid-ask spreads widened in the face of macro uncertainties. Ticket volume grew through 2022, suggesting that buyer and seller interest was not the principal factor constraining trading volumes. Instead, ZX’s average bid-ask spread tripled from January to August as investors quickly adjusted bid pricing to reflect public equities multiples but sellers were largely unwilling to break on pricing expectations anchored to 2020 and 2021 primary financings. These trends started to reverse in Q4, with the average bid-ask spread narrowing more than 30% from the August highs as seller pricing expectations fell more in line with buyer sentiment.

Zanbato’s equal-weighted index tracks secondary market performance of ZX’s most actively traded companies, providing additional insight into the divergence and subsequent convergence of private secondary pricing to public comps. Consistent with the bid-ask spread data above, private markets were slow to react to falling public markets through the first half of the year. However, pricing quickly converged with public comps thereafter, closing the year down 60%. Notably, the 60% drop reflected performance closer in line with an index of recent IPOs than broader tech markets.

In 2022, certain investors started to differentiate their internal marks on common vs. preferred stock holdings, marking late stage preferred positions on average 10% higher than common stock positions. This suggests institutional investors are increasingly probability-weighting downside exit scenarios in which late stage preferred stock could potentially accrue a significantly higher payout than common stock.

Heat Map of ZX Index Value YoY change

SpaceX
34.44%
Rippling
19.2%
Relativity Space
-14.79%
Scopely
-19.84%
Rubrik
-20.35%
Addepar
-26.37%
Brex
-29.73%
Ripple
-30.27%
ThoughtSpot
-32.19%
Chainalysis
-32.43%
Cybereason
-32.53%
Databricks
-33.86%
Flexport
-35.19%
Diamond Foundry
-40.53%
Pipe
-42.39%
Snyk
-42.48%
Convoy
-45.43%
Canva
-46.03%
Toss
-46.93%
Epic Games
-48.93%
Tradeshift
-49.45%
Tanium
-49.86%
Zocdoc
-52.12%
Varo Money
-52.94%
Plaid
-53.42%
Rappi
-53.44%
Arctic Wolf
-53.65%
Carta
-54.38%
Impossible Foods
-55.11%
Airtable
-55.57%
Klaviyo
-58.68%
Chime
-58.8%
Dataminr
-58.87%
Outreach
-58.98%
Discord
-59.06%
Stripe
-59.45%
Triller
-60.26%
Kraken
-62.65%
Automation Anywhere
-62.77%
Uphold
-65.78%
Just
-66.81%
Calm
-70.0%
Revolut
-70.91%
DataRobot
-72.26%
Reddit
-72.45%
Instacart
-76.01%
Attentive
-77.68%
Thrasio
-83.43%
Klarna
-84.1%
Bolt Financial
-87.45%

The heat map above depicts the annual secondary market performance of the 50 most actively traded private companies as tracked by their ZX Index Values. While performance varied widely across these companies, the average 50% decline reflected the broad-based weakness seen through private markets in the back half of the year. Notably, these declines in secondary market pricing were in most cases much steeper than the price declines relative to companies’ last rounds of financing, as seen below in the table comparing each company’s ZX Index Value at the end of 2022 to the price of its most recent financing. This was due to secondary markets routinely trading at premiums to last round pricing in 2021, as significant demand from oversubscribed financings frequently spilled into secondary markets. In normalized market environments the opposite is typically true, with secondaries trading at discounts to last round pricing.

In addition, we continue to see a significant variance between institutional fund marks and secondary market prices. The dollar-weighted average mark differs from the ZX Index Value by more than 5% for about 90% of the 50 most actively traded private companies on ZX. We expect this discrepancy to narrow going into 2023, as more funds and valuation agents look to incorporate secondary prices in their valuation process.

Comparison of ZX Index Value vs. Last Round Pricing
CompaniesDEC’22LR PricingChg vs. LR
Neuralink$60.57$13.74+340.83%
Rubrik$32.53$23.55+38.11%
SpaceX$75.57$70.00+7.96%
Arctic Wolf$8.83$8.24+7.12%
Docker$33.34$31.26+6.66%
Kraken$20.71$19.84+4.39%
Kindbody$37.27$35.94+3.70%
Anduril$16.44$16.52-0.46%
Upside Foods$4.49$4.58-1.89%
Pipe$51.01$58.50-12.80%
Relativity Space$19.71$22.84-13.69%
Neo4j$11.26$13.10-14.05%
GupShup$19.46$22.87-14.89%
Vanta$7.59$9.01-15.77%
Algolia$24.15$29.25-17.42%
Addepar$2.15$2.65-18.83%
Stripe$31.48$40.11-21.52%
Plaid$442.91$582.15-23.92%
Automation Anywhere$12.59$16.61-24.22%
Niantic$44.25$58.68-24.59%
Brex$26.14$34.74-24.75%
Faire$19.59$26.16-25.11%
Databricks$54.36$73.48-26.02%
Zipline$23.67$32.63-27.46%
Rippling$30.05$42.12-28.65%
Ramp$20.93$30.00-30.23%
Cybereason$3.36$4.95-32.16%
Benchling$22.13$32.70-32.32%
Notion$37.77$56.34-32.96%
Tanium$7.39$11.40-35.15%
Icertis$52.52$82.64-36.45%
Snyk$9.03$14.34-37.05%
MasterClass$20.02$31.88-37.20%
VTS$8.52$13.71-37.88%
Farmers Business Network$36.98$62.16-40.51%
Diamond Foundry$14.01$24.00-41.63%
Starburst Data$3.34$5.75-41.90%
6Sense$18.12$31.63-42.72%
Gusto$17.29$30.40-43.12%
Scale AI$5.32$9.37-43.21%
Convoy$8.95$16.50-45.75%
ThoughtSpot$13.86$25.83-46.34%
Podium$15.78$30.26-47.85%
Discord$281.22$550.62-48.93%
Impossible Foods$12.25$24.16-49.30%
Chime$34.40$69.07-50.20%
Carta$20.04$40.30-50.27%
Rappi$30.79$64.42-52.21%
Tradeshift$7.84$17.54-55.30%
Deel$13.50$30.63-55.92%
Calm$6.94$15.89-56.33%
Outreach$12.58$29.27-57.02%
Noom$25.91$60.34-57.06%
Chainalysis$15.98$40.02-60.07%
Dataminr$17.26$44.00-60.77%
Zocdoc$10.98$29.29-62.51%
Attentive$16.65$45.66-63.53%
ConsenSys$48.04$140.06-65.70%
Reddit$20.02$61.79-67.60%
Airtable$60.04$187.28-67.94%
DataRobot$8.62$27.36-68.49%
Netskope$6.24$20.45-69.48%
Ripple$17.99$61.49-70.74%
goPuff$291.98$1,000.00-70.80%
Just$6.18$23.52-73.73%
Instacart$30.57$125.00-75.54%
Cerebral$7.65$31.85-75.98%
Thrasio$3.94$20.25-80.54%
Bolt Financial$4.93$50.11-90.16%
Comparison of ZX Index Value vs. Fund Marks
CompaniesDEC’22Latest markChg vs. mark
DataRobot$8.62$6.10+41.31%
goPuff$291.98$211.09+38.32%
Algolia$24.15$17.66+36.75%
Docker$33.34$25.25+32.04%
Stripe$31.48$25.30+24.43%
Benchling$22.13$18.67+18.53%
Convoy$8.95$7.58+18.07%
MasterClass$20.02$17.46+14.66%
Canva$1,068.69$941.35+13.53%
SpaceX$75.57$68.07+11.02%
Relativity Space$19.71$19.11+3.14%
GupShup$19.46$19.08+1.99%
Rubrik$32.53$32.00+1.66%
Databricks$54.36$56.60-3.96%
Zipline$23.67$25.18-6.00%
Cerebras$19.49$21.01-7.23%
Automation Anywhere$12.59$13.79-8.70%
Arctic Wolf$8.83$9.89-10.72%
Bytedance$142.74$160.59-11.12%
Carta$20.04$22.77-11.99%
Epic Games$735.24$845.73-13.06%
Tanium$7.39$8.65-14.57%
Flexport$11.31$13.65-17.14%
Chime$34.40$41.94-17.98%
Discord$281.22$353.80-20.51%
Scale AI$5.32$6.71-20.72%
Snyk$9.03$11.47-21.27%
Celonis$291.11$369.80-21.28%
Icertis$52.52$70.00-24.97%
Gusto$17.29$23.53-26.52%
Dataminr$17.26$23.73-27.27%
Cybereason$3.36$4.62-27.27%
Farmers Business Network$36.98$52.01-28.90%
Netskope$6.24$9.33-33.12%
Instacart$30.57$45.89-33.38%
Impossible Foods$12.25$18.46-33.64%
ThoughtSpot$13.86$21.53-35.62%
Circle$30.79$48.79-36.89%
Zocdoc$10.98$17.77-38.21%
Rappi$30.79$51.53-40.25%
Varo Money$4.65$7.91-41.21%
DataStax$5.07$8.71-41.79%
Airtable$60.04$105.21-42.93%
Outreach$12.58$22.37-43.76%
Reddit$20.02$38.83-48.44%
Revolut$182.54$389.27-53.11%
Diamond Foundry$14.01$31.04-54.86%
Kraken$20.71$51.36-59.68%
Thrasio$3.94$10.00-60.60%
ConsenSys$48.04$136.55-64.82%
Ripple$17.99$63.68-71.75%
Bolt Financial$4.93$32.27-84.72%

To learn more about ZXData, the leading market data provider on private companies, reach us at datainquiries@zanbato.com

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