More Related Content Similar to Sandhillslidesnov62015 151106233823-lva1-app6892 (1) (20) 5. Index Computation Strategy
A value for every company every month
Companies enter index upon first round of funding
Companies exit at IPO, Acquisition, or Shutdown
If company raises a round, shares value, we use it
If company raises a round, no value, we estimate it
For IPOs, use pre‐money value
If shutdown, value = 0
If acquisition, value shared, we use it
If acquisition, no value shared, we estimate it
Interpolate between rounds, and extrapolate after last round
Essential: Adjust estimated values for selection bias.
6. Data challenges:
1) Gravefinder bot to find quiet failures.
2) Rounds: Upward bias in reported values. Correct bias using
uncensored, secret, data.
3) About half of acquired companies do not share a value. Many
are actually failures. To estimate missing values, we use
everything we know about the company (money raised,
industry, location, level of the stock market, years from first
round, business status, bridge before exit, whether acquirer
was public or private, and more), plus data we have gathered
on effort required to find findable values.
Bigger effort to find a value ⇒lower value.
8. Industries
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
The Sand Hill Index:
All Industries Compared
Other
Info Tech - Hardware
Health
Retail
© 2014 Sand Hill Econometrics, Inc. ALL RIGHTS RESERVED
Total
Info Tech - Software
Cleantech
9. Some summary statistics
Total $$ invested in exited companies $410 bn
Total $$ value of exiting companies $1,215 bn
$$ Value to investors from exits $700 bn
$$ Value to founders & ees $515 bn
Gross nominal return to investors: 18%/yr
All figures are before fees and carry
% of founders with $ > 0 at exit: 30%
Market Cap of companies still private now $870 bn
$$ invested in companies still private now $250 bn
