Tech FOMO prices at a disturbingly high level

Hot pursuit. Want to buy a $1 bill for $13? That is effectively what’s on offer from Destiny Tech100 and its stakes in closely held technology firms such as SpaceX, OpenAI and Stripe. fund me its market debut last month with a net asset value of $53 million at end of December, but those assets are now being valued by public investors at about $700 million. It imputes a disturbingly high price on fear investors have of missing out on next big thing.

Closed-end funds like Destiny’s own pools of assets, and shareholders get slivers of m. Changes in market price do not directly affect pool’s size. As fund’s own prospectus warns, shares of closed-end funds frequently tre at discounts to net assets. In this case, y are being valued at a giant, he-scratching premium. fund was worth as much as $1 billion on Monday, with price exceeding $100 after initially listing on March 26 at about $5. shares h slumped about 30% by early Tuesday afternoon.

fund, whose parent company Destiny XYZ is led by Y Combinator alum Sohail Pras, has acquired ownership in just 23 firms so far, 77 fewer than 100 intended. Elon Musk’s rocket venture, last valued at some $180 billion, accounted for a third. Total annualized losses in fund were 23% between its 2022 inception and Dec. 31. best explanation for valuation discrepancy is an overeagerness to get in early on hot firms before ir initial public offerings.

In a bygone era, outfits like Epic Games would have gone public much sooner. But a cutthroat race to back promising startups led venture capitalists to cede power to entrepreneurs, who increasingly prefer to keep firm grips on ir creations and limit disclosure as long as possible. Big portfolio managers, private equity firms and family offices have helped furr postpone IPOs with later-stage capital that attempts to extract some value previously available to public shareholders.

It’s refore understandable why smaller investors want to jump queue, too. It makes no sense, however, to put a whopping premium on assets whose valuations are probably inflated alrey. One or two of Destiny Tech100 holdings may generate a healthy return, but more likely outcome is that investors are revealing an absurd level of exuberance. Silicon Valley should regard situation differently: re’s value out re for companies to grab for mselves.

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Destiny Tech100, a closed-end fund designed to hold stakes in 100 privately owned technology companies, me its New York Stock Exchange debut on March 26 at $8.25 a share, a 71% increase from its $4.84 reference price. As of 1430 GMT on April 9, y were tring at $63.82, a 37% decrease from $100.84 peak a day earlier. fund, created by investment firm Destiny XYZ, currently has positions in 23 firms, including OpenAI, SpaceX and Stripe.