The Prime Unicorn Index benchmark, the standard bearer for private markets benchmarking, tracks post-money valuations for U.S-based, VC-backed private companies. Reflecting the broader private market, the Index is down 6.79% year to date and dropped 15.37% in 2022.
But looking at individual component companies, in particular the variance between its preferred stock price (issued to the institutional investors) versus the common price (issued to its employees) and the relative movement (up or down), can provide a more accurate picture of what is happening in the private markets.
For example, Lacework, Inc. has developed a Cloud Security Platform that addresses the speed, scale, and automation of the cloud. The platform’s technology backbone combines active cloud resource monitoring, advanced analytics, and smart visualization. It is also a component in the Prime Unicorn Index benchmark, the standard bearer for private markets benchmarking.
Lacework raised $1.3 billion in its last preferred round of Series D in November 2021, with participation from Tiger Global, Altimeter Capital, D1 Capital Partners, Franklin Templeton, and others which valued the company at approximately $6.6 billion on a post-money valuation basis at a preferred price per share of $25.09. Since its last financing, the company has filed two Employee Plan Exemption Notices with the state of California. The last two government filings indicated its common shares were priced at $8.77 per share (January 4, 2022) and $3.66 per share (May 18, 2023), indicating a 58.27% decrease in the value of its common shares that were granted to company executives.
Alto Pharmacy Holdings, Inc. (FKA: ScriptDash, Inc.; AKA: Alto Pharmacy) operates a medication distributor and applies innovative technology to provide a patient-centric pharmacy and offer patients a convenient pharmacy experience and accessible healthcare. It is also a component in the Prime Unicorn Index benchmark, the standard bearer for private markets benchmarking.
In January 2022, Alto Pharmacy raised $200mm in a Series E Preferred round led by SoftBank, with participation from 10X Capital, Expanding Capital, and others which valued the company at roughly $1.3 billion on a post-money valuation basis at a Series E preferred price per share of $15.46. Recently, on June 26, 2023, it authorized a Series F Preferred round at $6.1432 per share, dropping the company’s valuation to roughly $531mm. This jeopardizes the company’s status as a unicorn and puts it at risk of being removed from the Prime Unicorn Index at the end of the next quarter.
As venture capital expert Joe Bartlett used to say, “One robin does not make Spring, but it sure is indicative of a season change.” Whether Lacework and Alto Pharmacy’s financings are predictive of a season of difficult times for the broader private markets remains to be seen. Tune in later this week for a broader review of the Prime Unicorn Index reconstitution and more examples of pricing differential for unicorn companies.