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Everything there’s to know about Private Markets

Everything there’s to know about Private Markets

<style type="text/css"> .title-defi { text-align: center; } .h6-heading { text-align: center; margin-bottom: 30px; font-size: 20px; font-weight: 700; color: #002d9c; margin-top: 15px; } .sub-heading-defi { text-align: center; color: #002d9c; font-size: 26px !important; font-weight: 700 !important; } .sub-heading-defi2 { text-align: center; font-size: 26px; margin-top: 30px; margin-bottom: 35px; font-weight: 700 !important; } .h6-heading { text-align: center; } .defi-img { width: 100%; } .center-defi { display: flex; justify-content: center; margin-bottom: 20px; } .cards-defi { display: flex; flex-wrap: wrap; justify-content: space-around; } .cards-defi img { width: 55px !important; } .cards-defi > div { display: flex; flex-direction: column; justify-content: center; align-items: center; width: 40%; margin-bottom: 40px; background: #eff1f9; padding: 75px 45px; box-sizing: border-box; text-align: center; box-shadow: 25px 20px 20px 0px rgb(0 0 0 / 10%); } .icon-box-defi { display: flex; align-items: center; margin-bottom: 40px; box-shadow: 25px 20px 20px 0px rgb(0 0 0 / 10%); background: #f2efe9; padding: 35px 25px; } .icon-box-defi-icon img { padding-right: 20px; } .icon-box-defi-content p { margin-bottom: 0; } .icon-box-defi-content h5 { margin-top: 0; font-weight: 700; margin-bottom: 22px; } .icon-box-defi-content { border-left: 3px solid #d5d6d6; padding-left: 20px; } .h5-defi { font-size: 26px; text-align: center; font-weight: 700 !important; margin-top: 80px; margin-bottom: 50px; } .cards-defi p { font-weight: 700; margin-bottom: 0; margin-top: 10px; } h3.conclusion { font-size: 26px; text-align: center; font-weight: 700 !important; margin-bottom: 55px; margin-top: 55px; } .cb p { clear: both; } .content-defi { color: black; font-size: 20px; line-height: 35px; } .cards-defi span, .cards-defi p { color: black; font-size: 20px; line-height: 35px; margin-top: 20px; font-weight: 400; text-align: center; } .icon-box-defi-icon img { width: 100px; } .brand-blue { color: #3761c8 !important; } #custom-code h4 { font-family: 'Aktivgroteskcorp'; font-size: 24px; text-align: center; } .cb img { width: 230px !important; margin-bottom: 30px; } #custom-code p { font-size: 20px !important; line-height: 35px !important; } .icon-box-defi-icon img { width: 100px; max-width: 100px; } .col-3 h5 { background: #3761c8; text-align: center; color: white; line-height: 35px; } .col-3 ul { color: #1f1f1f; font-size: 20px; } .col-3 { display: flex; margin-bottom: 30px; } .col-3 > div { margin: 0 10px; } .col-3 a { color: white; background: black; padding: 10px 30px; font-size: 18px; } @media (max-width:500px) { .col-3 { display: flex; margin-bottom: 30px; flex-direction: column; } .col-3 > div { margin: 0 10px; margin-bottom: 30px; } .cb img { width: 110px !important; margin-bottom: 0px; } #custom-code p { font-size: 16px !important; line-height: 25px !important; } .sub-heading-defi { text-align: center; color: #002d9c; font-size: 18px !important; font-weight: 700 !important; } .sub-heading-defi2 { text-align: center; font-size: 18px; margin-top: 0; margin-bottom: 35px; font-weight: 700 !important; } .icon-box-defi { flex-direction: column; } .icon-box-defi img { margin-bottom: 25px; } .icon-box-defi-content { border-left: 0; padding-left: 0; } .h5-defi { font-size: 18px; } .h6-heading { font-size: 16px; } .cards-defi > div { width: 100% !important; } .cards-defi p { font-weight: 700; text-align: center; } .content-defi { color: black; font-size: 16px; line-height: 25px; } .cards-defi span, .cards-defi p { color: black; font-size: 16px; line-height: 25px; margin-top: 20px; } } </style> <div class="content-defi">Currently, there’s a lot of wealth that resides in private markets. We know that public markets have acted as the most significant source of capital and liquidity for companies. However, this liquidity has slowly been shifting to private markets. Researchers estimate that the private markets are growing at twice the rate of their public counterparts. In 2020 <b>private equity secondaries raised around</b> <span class="brand-blue">US $87B</span>, tripling their 2019 totals. Additionally, <b>VC investments in private markets have reached over</b> <span class="brand-blue">US $280B</span> just in the first two quarters of 2021, breaking the record high level of investments in 2020</div> <h3 style="text-align:center;color: #1f1f1f;">So why is there so much traction in the private space?</h3> <img class="defi-img" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620b79aa42fee6bb2afc61f0_kpm_blog_hero-280721.png" alt="Hero Image" /> <br><br> <img class="defi-img" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620b79aa79e24463691f6d50_kpm_blog_grid.svg" alt="Hero Image" /> <div class="cb"> <p><img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca0f50227d5c354650390_kpm_grab.png" alt="left image" style="width:170px;float: right;margin-left: 15px;"> For example Grab announced a SPAC merger recently which values the company at a valuation of US$40B. As opposed to its last private funding round which valued the company at US$14.9B in October 2019.</p> <p><img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca0f41a915d8697d495a2_kpm_airbnb.png" alt="right image" style="width:170px;float: left;margin-right: 15px;"> An example of another blockbuster IPO was that of Airbnb. A company that was valued at US$31B during its last round of funding, listed at a valuation of US$47B on the stock market.</p> <p>Until recently, these opportunities and their many benefits have only been available to institutions. Now platforms like <b>Kristal.AI</b> are democratizing access to these companies so that individuals like you can access quality investment opportunities in high-growth startups and pre-IPO companies.</p> </div> <img class="defi-img" src="https://global-uploads.webflow.com/614a9edd8139f577b9897a7e/61ade7c34e2822d598fcc026_kpm_featured_blog.png" alt="Hero Image" /> <h3 style="text-align:center;color: #1f1f1f;">All you need to know before investing in private markets</h3> <p class="content-defi">Investing in private markets can take the shape of 2 types of transactions</p> <p class="content-defi"><b>1. Primary</b></p> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7bfb4857c9143d07be1_kpm_Money_Transfer.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <div> <p>A primary round of fundraising is when the company issues new shares at an estimated pre-money valuation and raises fresh funds from new or existing investors for purposes such as growth, expansion, etc.</p> </div> </div> </div> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img style="padding-right: 10px;width: 125px;" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7bf2a8e8d0a4b1aaac2_kpm_investors.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <p>As an investor, you can participate in primary funding rounds and co-invest through entities like Kristal.AI and gain a shareholding interest in the company</p> </div> </div> <p class="content-defi"><b>2. Secondary</b></p> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7c0c20c0a87425490eb_kpm_transfer.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <div> <p>A secondary transaction occurs when an existing shareholder sells their shares in the company to another entity</p> </div> </div> </div> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img style="padding-right: 10px;width: 125px;" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7c005953646e82e70b6_kpm_notice.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <p>The seller is required to notify the company of this proposed transaction. This notification triggers the right of first refusal (ROFR). This gives existing shareholders the first right to the shares to be transferred by the other existing shareholders. The transaction can be successful only when the ROFR is waived</p> </div> </div> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img style="padding-right: 10px;width: 125px;" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7c00227d57beb65263f_kpm_Time.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <p>The right of ROFR can be exercised during a typical 30 day period after which it lapses</p> </div> </div> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img style="padding-right: 10px;width: 125px;" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7bf84bd07288abc8346_kpm_risk.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <p>ROFR is an inherent risk with any secondary private market transaction</p> </div> </div> <div class="icon-box-defi"> <div class="icon-box-defi-icon"><img style="padding-right: 10px;width: 125px;" src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620ca7c0c64c0dee4ad12c55_kpm_shares.svg" alt="Icon Image" /></div> <div class="icon-box-defi-content">  <p>You can get access to pre-IPO companies and high growth startups through secondary transactions, and platforms like Kristal.AI can give you access to such transactions.</p> </div> </div> <p>Worried how you can exit once you’ve invested in private markets? Existing investors into private companies typically get an exit or can liquidate only when the company goes public. These are some of the common ways in which a company can go public.</p> <div class="col-3"> <div> <h5>Direct Listing</h5> <img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620cca7604c60a082ca996e8_slack.png"> <ul> <li>The company lists on the stock exchange and the shares become freely tradeable on the exchange</li> <li>There is no lock-in period or fresh issue of shares with a direct listing</li> </ul> </div> <div> <h5>IPO</h5> <img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620cca7617d1b9c69c1c109b_airbnb.png"> <ul> <li>They offer shares in their company to the public in a new stock issuance</li> <li>Existing investors are subject to a lock-in period during which they cannot liquidate or monetize their shares</li> <li>It is after this lock-in period that they are allowed to trade their shares in the stock market</li> </ul> </div> <div> <h5>SPAC</h5> <img src="https://cdn.prod.website-files.com/614a9edd8139f5def3897a73/620cca7717d4929ebb3dd903_grab.png"> <ul> <li>The private company merges with a public shell corporation in order to go public</li> <li>Similar to an IPO, there is a lock-in period with a SPAC merger as well</li> </ul> </div> </div> <div class="col-3"> <div> <p>Find investments in the private markets interesting? To learn more about our platform</p> <a target="_blank" href="https://help.kristal.ai/hc/en-us">Click Here</a> </div> <div> <p>Signup with us at Kristal.AI to access exciting pre-IPO investment opportunities!</p> <a target="_blank" href="https://accounts.kristal.ai/signup?stage=signup">Sign up</a> </div> </div> <p class="content-defi">A private company might indeed take some time before it goes public. If you’re concerned about being locked in till then don’t worry! Companies like Kristal.AI aim to enhance the liquidity in this very space to give you flexibility. While an IPO or any other mode of going public is a common mode of exit for investors in private companies it is not the only mode of exit that is available. If you don’t want to wait until the company goes public and want to exit earlier, companies or platforms like us can enable you to do so by providing an exit when you wish at market value through a secondary sale.</p> <p class="content-defi"><b>Contributions by Navya Lodha interning with Kristal.AI</b></p>

By

Aishwarya Singh

July 30, 2021

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