Because of late stage #VC funding, #innovation in the private markets is incredibly overvalued. In the public markets, innovation is undervalued, a void created partly by backward-looking, passive and benchmark-sensitive strategies.
https://twitter.com/ScottMAustin/status/1132154613757489153
Large public market asset managers contributed to this void as they have tried to capture more “alpha” by moving funds from the public equity markets to the pre IPO markets during the past five to ten years.
The valuation gaps between companies focused on the same kind of innovation in the private markets vs. public markets can be stunning: Formlabs at 10X revenues vs. #Stratsyss at 2x is a good example.
I am surprised that large asset managers like #Fidelity and that are participating in both the public and private markets aren’t arbitraging this significant gap in valuations. Don’t their private and public equity teams compare notes. Don’t they talk to one another?
.@ARKInvest analyst, @mfriedrichARK, is researching and surfacing not only the significant gap in valuations between the public and private markets but also the beneficial rights that late stage venture investors are extracting to get these deals done at such high valuations.
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