Christian Munafo 00:00
Welcome everyone and thanks for joining us for today's webinar. I am Christian Munafo, Chief Investment Officer at SP Investments Management (“SPIM”), which is the advisor to the Sharespost 100 Fund. And I'm joined by Kevin Moss, Chief Operating Officer at SPIM and President of the SP 100 fund.
Kevin Moss 00:16
Hello and thanks for joining everybody.
Kevin and I with you today from separate locations, given ongoing health precautions, and we will be using the Share Screen function for our presentation. As noted in the past, our objective is to get in front of you every quarter to provide what we believe are relevant updates. Since last time we spoke in mid-June, there have continued to be developments around health, economic, market, social, and politically driven activity. As many of you can attest, we continue to make ourselves available for virtual meetings and calls alike during this period of increased volatility and macro uncertainty to address your questions. Similar to the webinar in June, it was quite easy for us to pull together a list of topics this time while we continue to encourage your engagement to make sure we're addressing the areas of interest and future webinars. So again, we encourage you to please share your thoughts with us. And if you have specific questions that you prefer to address offline that's also fine. I'm going to kick it over to Kevin to touch on the agenda for today.
Great. Thanks, Christian. Yeah. To set the agenda for today, we're going to start off with the corporate and investment advisory update. Obviously, we have some exciting news there. We're going to turn it over to Christian for a market perspective. We'll move on from there to a fund update. And then finally we'll have a market outlook. Obviously, at the end, as usual, we'll answer some questions. Anything we can't get back to you today, we'll follow-up with you directly. So let's just move right into the corporate update. As a corporate update, we covered last webinar that SharesPost is merging with Forge. The merger was announced on March 12th, and this will create one of the largest private security marketplaces in the world. This transaction is still on track, and we're hoping that it closes in the next 30 to 45 days. As a reminder, SP Investments Management, the advisor to the SharesPost 100 fund, is not part of this transaction. We did not make the advisor part of the transaction for a variety of reasons, but primarily for the following announcement pertaining specifically to the advisor.
As you all know, the fund was launched and has matured within inside of SharesPost. It was a great place to start a fund like this given what we do. However, we have long felt that it's not necessarily the best place to scale a fund like this given that SharesPost does not distribute ‘40 Act funds. So to that end, on August 28 SPIM entered into an agreement with Liberty Street Advisors to facilitate Liberty Street becoming the investment advisor to the fund. Liberty is an SEC-registered investment advisor. They have 4 mutual funds and they have over $1 billion in AUM. I'm sure we'll get many follow-up calls with this but needless to say we are very excited to be part of this transaction. I think though, the most important thing for shareholders to know is that nothing is changing for us except the advisor. And as a result, our ability to really scale this fund to where we believe it can be. The investment team, the strategy, the governance, the trustees, the vendors, UMB, Foreside - our distributor, all of this is going to remain the same. . And we couldn't be more except excited about our new home, especially as it relates to the fit for the team, the cultural atmosphere, and our ability to help scale this fund. We believe that this transaction should close in the fourth quarter of this year. It's going to be marketed by LSA's affiliated broker-dealer, HRC Fund Associates. HRC was founded in 2007. It's an SEC and FINRA registered broker-dealer, and it brings longstanding relationships with numerous financial advisors. So Christian, with that being said, I'm going to turn it over to you for market perspective.
Great. Thanks, Kevin. Yeah, I would echo your sentiments. We're very grateful that SharesPost has provided us with all the support to date and continues to through the transaction closing. And we're very excited, as you said, about the transition over to Liberty Street to help accelerate the AUM build through their extensive distribution channels, so we can better optimize our origination efforts which allows us to write larger tickets and also further build out the portfolio, which would benefit all of our shareholders. So with that, why don't we move on to current perspectives with regards to market conditions, public market volatility, and how this all impacts the valuations of late-stage venture-backed companies, as well as the exit environment for them. But before I do that, just a quick reminder that this is a fund looking to take advantage of dislocations in a private market where there is no efficient exchange, like we have with public markets, where information is asymmetric, where access to these companies is limited, and where the underlying assets, we're seeking are disruptive, innovation-driven technology companies often addressing a very large, addressable markets that we believe have the ability to either displace incumbents or be complementary to them, which will enable the customer, the end-user, or even the patient to have a better experience and a better outcome.
Most of the time, these dislocations we seek are driven by the simple fact that we've discussed with you in the past that these companies continue staying private for longer. By staying private for longer this creates friction within the ownership structure of these companies, as well as within the funds and the investors who invest into these companies since not all investors or shareholders have the same investment horizons. That also applies to founders of these companies and employees. And so that means that there may be shareholders who have a need or a desire for liquidity before the natural exit occurs, whether that be an M&A event or an IPO event. This is a large and inefficient market where the supply often exceeds demand in a normal environment, which continues to be an environment today that has increased volatility and uncertainty. By having that increased volatility, uncertainty, and these macroeconomic concerns, it tends to add to the inefficiencies of this asymmetric information, making it easier for groups that have sophistication and experience investing in the asset class to leverage those inefficiencies even further. So with that, as a quick reminder, the macro environment has not significantly changed since the last time we spoke in mid-June. So we're not going to go into that same level of detail. I think the high level is that there continues to be clearly global health issues. There's global economic concerns all stemming from the COVID-19 pandemic and what may potentially be a resurgence of cases this fall.
With some of the data that we're getting from overseas, as well as with inside some regions of the United States itself, have clearly started to-- to have gotten worse-- to get worse. And so we're clearly tracking that closely. And while it seems like there is progress being made towards vaccines and other types of treatments, we continue to acknowledge that the implications of this pandemic could drag on longer than expected. In addition to that, we note that oil prices continue to remain low, the China-oriented trade tension continues, and as we all know, there's ongoing political and social concerns regarding the upcoming Presidential election. In the aggregate, this has all resulted to the volatility index remaining fairly high, verse historical norms. And for those of you who follow the volatility index, it had actually declined a fair amount during the summer months, but it recently picked up post-Labor Day. That said, the overall volatility remains well below the record levels that we saw it hit back in March during the peak of the pandemic. While unemployment levels have declined quite dramatically since earlier this year, they also remain high verse historical norms. And there continues to be demand for additional stimulus, which seems feasible, but unfortunately is stuck in a political stalemate right now. So we'll see how this plays out over the coming weeks.
Additionally, up until recently, most of the public market indices had surged back to record highs with the most vulnerable sectors still including areas like transportation, lodging, entertainment, restaurants, advertising, etc. However, in comparison, as we've previously discussed, the more innovative technology-enabled sectors - such as enterprise software, business continuity, big data, cybersecurity, e-commerce, education technology, even digital health - have continued to perform well, as have technology-focused industries, like the NASDAQ 1002. So post-Labor Day we did see, as I noted above, an increase in volatility and a bit of a sell-off across the public indices. It's possible this can continue through the election. To put some numbers out there, we thought it would be helpful, the NASDAQ had recently been trading at its all- time high, but has recently come down and is now up about 11% since our last webinar in mid-June, but still 21% year to date. The S&P 5003 is up around 6% since our last webinar and about 2% year to date. The Dow4, up 4% since our last webinar, is actually now down 5% for the year. And finally, the Russell 20005 is up about 5% since mid-June but down 10% for the year. So it's just important to go through what we've seen with these indices.
Again, we had a very strong V-shape recovery. Post-Labor Day we've had a bit of a sell-off, which we're closely monitoring. It's obviously difficult for us to speculate longer term if the worst is behind us regarding these health risks, but we remain cautiously optimistic regarding the public markets, volatility, and economy. And Kevin and I, again, would point back to what we told many of you in March during the peak of this crisis, that this is not the first time we've seen an increase in public market volatility around macro concerns, whether it be for economic reasons, health reasons, or safety reasons. And of course, that's not to make light of the COVID-19 pandemic and the surrounding environment and all those who have been suffering and many who have passed, but things do need to be put into perspective and it is often helpful to reflect on historical events as a subsequent market behavior to prognosticate what we think may happen in the future. And again, as we told you back in March, we expected there, obviously, to be a hit in the downtick, as there was. But as we're seeing the public markets have recovered quite favorably.
And what does this all mean though, for the private companies, for these late-stage venture-backed companies that we invest into through this fund? First, of course, the COVID-19 pandemic has had an impact on the private market ecosystem in various ways. It's not immune to a lot of these same issues that face the public markets. And we're closely monitoring, again, these infection rates and progress made around vaccine development. But also, it's important to acknowledge that private companies don't have the same amount of volatility that we see with public companies. Which, as we know, trade at a very rapid pace - essentially, every second or fractions of a second - for market forces that may not actually reflect the underlying fundamentals of a given company. So again, that's not to say that the private market is immune to volatility or that it's immune to those same market forces that hit the public companies, but there are differences that we do need to acknowledge. And private companies are insulated more from what we would call short-term idiosyncratic market volatility, which is more relevant in the public markets. And Kevin's going to touch on this momentarily as it relates to the SP 100 fund in our portfolio.
In terms of valuations of these late-stage companies we continue to believe that overall, there should not be a material impact from here. Particularly, since there were signs of a recovery, that I just touched on, that continue making progress. And these companies that we invest into in this innovation and growth segment of the market continue to be very resilient. If anything, we think that the vulnerable companies have likely already been hit quite hard and there could be additional room for these more innovation-oriented companies that have been thriving to continue thriving so they could even perform better in the coming months ahead. And again, these are companies that are addressing very large markets and they have essentially undergone significant acceleration of the adoption of what it is they offer during this pandemic due to various factors that we've all been facing. Again, much of this is going to be evidenced, and Kevin's going to give you some examples in terms of how our portfolio has performed in terms of new rounds of financings. But if we look across the overall late-stage venture environment, there really have not been many down-round financings. And again, as it relates to our portfolio, we've had essentially all but one up rounds or flat financings, which we're very pleased with.
So moving on, we've told you about the exit environment that passed leading up to the pandemic. Clearly, based on the disease numbers, you've seen that the M&A and IPO were both declining well in advance of the first quarter of this year. That said, we are pleased to be able to report that in the second quarter, there clearly has been - and in the third quarter, in particular - a significant uptick in exit activity driven by IPOs, SPACs, and direct listings. Renaissance Capital, which is a firm that closely tracks developments in public-oriented listings, recently reported that this is the largest volume of IPO issuance they have seen since 2014. That's not going to apply to companies that may not be as well situated in terms of their business models and their balance sheets. But companies that have strong balance sheets, patient investors, very sound business models addressing large markets, we are seeing support from the markets, especially as we're seeing the public markets for these companies to achieve liquidity for their investors. We're going to touch on this shortly, we're also going to touch on SPAC shortly. Now of course, there's going to be instances where the macro volatility will result in delays and decisions to postpone, whether it be in M&A or IPO event. But overall, I think Kevin and I and our team feel very cautiously optimistic about the exit environment. And from what we are hearing, there may be some significant public offerings before the election and additional ones before the end of the year, including some positions held by the fund.
Just a brief note on SPACs. For those of you not familiar, SPAC is a representation for what's called the Special Purpose Acquisition Company. And the easiest way to think about these companies, which are also often called black check-- a blank check company, excuse me, is they're essentially a shell company with no operations that is able to go public with the intention of acquiring or merging with a company utilizing the proceeds raised from that SPACs IPO. And we've seen a surge of activity year to date in SPACs. There's been already over 50 representing more than 20 billion in proceeds and we believe there's over a hundred in the market representing potentially $40 billion behind them. We also recently spoke with a senior tech banker at Citi, whose firm accounts for roughly 40% of all SPAC activity, and as he said, there's been a lot of developments around the structures of SPACs. Meaning, that they've come a long way structurally and are now catering to much more seasoned public market investors, particularly through utilization of different parallel investment structures, which are often referred to as pipes or sidecars.
And so like anything else, SPACs are not perfect, but they can be a more efficient, timely way for companies to establish a publicly-traded currency. While the financial sponsor equity that supports these SPACs out of the gate can be expensive, there's a counterargument that many IPOs in this late-stage tech market have historically been underpriced. We can point to Snowflake, which recently went public, as an example. The stock essentially doubled from the time they priced to the point it listed. And so there's an argument by many that money has been left on the table for existing investors and shareholders the way that typical IPOs have been run. It's also important to point out that, something which many people don't realize, IPOs are often priced and valued off of historical financials, with less emphasis put on forward-looking projections. SPACs are different. So SPACs spend significant time with the management teams of these companies to really get a sound understanding of what the future expectations are for this company. And in some situations, that could lead toward more flexibility on valuation. So there's a view that SPACs and also direct listings may offer a benefit to the existing investors and shareholders. Of course, the institutional market and the public investors that will invest into these offerings need to believe in the value they're being priced at, in order for them to trade well. But just to close out this thought, net net, we're happy to have more options for our underlying portfolio companies to get liquid. And based on our portfolio level conversations, most companies that we have in the portfolio that are considering near term public offerings are actually exploring both traditional IPOs and SPAC simultaneously, as well as direct listings. So these are all being pursued in parallel to identify what the optimal structure is for that company and investor base.
Now, finally, I'm just going to click to a slide that you've probably seen before. We put out a blog post over the summer, I believe it was back in June, which essentially showed that if you had invested in the last 10 years' worth of venture-backed IPOs in the last private round of financing, your performance would have significantly done better than if you had invested at the point that these IPOs priced and at the point that the IPOs first traded. So we thought that was interesting data to show you. And again, is a major reason why people invest in strategies like ours. So finally, before I turn it over to Kevin, just a point regarding investment activity. I touched on this a little bit earlier. This environment does provide attractive pricing opportunities for a lot of these late-stage venture-backed companies for us to access them. And so we've been extremely active throughout the year, while also being disciplined of course, in managing the cash. And so from our perspective, this is a large market without increased volatility. It's an inefficient market without volatility. This volatility, that we've been experiencing, it just increased the pipeline of opportunities that we have to invest into and we're very excited about continuing to execute in this environment. And Kevin will give you some examples. So to summarize, we're quite pleased, but also not surprised to see how resilient the late-stage venture-backed ecosystem has been throughout this challenging period. There continues to be significant capital being invested in these companies and the increase in exit activity, particularly as it relates to these public offerings, is very encouraging. So with that said, I'm going to turn it over to Kevin for a fund level update. And he's also going to discuss how some of these macro market-related trends I just covered are actually flowing through into our underlying portfolio itself.
Thanks, Christian. And as usual, before we get to the update, I just wanted to give a brief overview of the fund for anybody who is new to the story. As we've said in the past, it is a fairly simple story. We do strive to build a portfolio of multiple late- stage venture-backed companies. We're trying to provide access to this asset class, which is very difficult to get access to, not just to accredited investors, but to all investors. And we do this by having the fund registered under the Investment Company Act of 1940. We're also trying to provide a measure of liquidity in an asset class that has very little liquidity. And of course, we think that our team is very experienced. We have four decades of collected experience in venture capital and private equity investing. Let's get to the update. Well, to start, this has been really an incredible year. Standing back in March when COVID-19 hit, we all sat there really unsure of what was going to happen over the year. Of course, we were very nervous, as everybody was, given what was happening. But, in the end, we're pleasantly surprised about how our portfolio has performed. Here's a high-level update for the year so far. We've added five new companies. This is the same companies that we added since last webinar. However, we do have a lot of deals in the pipeline which you'll be seeing coming online in the near future. We've deployed $11.4 million in capital, but again, we have about 15 to 20 million dollars in the pipeline. We've had one company exit, which is One Medical, and I'll touch on that in a little more detail. And we have $5.8 million in company exit proceeds. That's mostly One Medical, but we're also making some sales in our private companies for the first time in the history of the firm. And I think, finally, is the most interesting point, and Christian touched on this, we've had 18 company financings. And I think what's important here is that this was what we were most nervous about. How are these companies going to survive? How can they continue to raise capital? And we thought, "Well, maybe some of them could, but in many cases, they'd be probably down rounds." But what we ended up finding out there was a lot of rounds of financing, a lot of companies raising capital, and a lot of these rounds were at higher valuations.
Next slide Christian. Yeah. Real quickly just to touch on the new positions. Again, this was reported to you in the last webinar. Algolia, Checker, Course Hero, MemSQL, and Tracks, these are all companies that are actually doing quite well in the pandemic. And if anybody has specific questions on these companies or any of the companies on our portfolio, please feel free to give us a call and we can talk about them in more detail. So here's what we really wanted to talk about and point out, I think, is the success of the fund this year and what has really contributed to our NAV is the number of financings that our companies were able to have. But not just that, the number of upfinancings. We've had 18 financing activities with our portfolio companies. 11 of these financings have been up rounds. Six of them have been flat rounds. One was a venture debt financing. And only one company had a down round, which was [inaudible], which we did report, actually, on our last webinar. That company, by the way, has given us an update, and they are now doing quite well. But we wanted to point this out, companies like Marquette, which increased their round from 1.9 billion to 4.3 billion. This is the kind of company within our portfolio that's really been stabilizing our NAV and adding to our returns. You've had companies like SpaceX that have done multiple rounds of financing. Udemy, a company that did a round of financing earlier this year, and is in talks to do another round at an even higher valuation. And even companies like Toro, which are in vulnerable spaces, was able to raise capital at a flat valuation. So this is really the story I think of 2020 for us, is that these companies continue to raise capital, and not only raise capital but at much higher valuations.
So for the exit this year we had One Medical. This is our only exit so far. We're anticipating more exits though before the end of the year. We talked a little bit about this, again, in the past. One Medical has done very well in the pandemic. It's digital health, so you would expect it to do so. Their IPO date was January 31st. They priced it at $14 a share and they raised $245 million. The lockup has recently expired in July. And as in the past, we've communicated to our shareholders, we're not in the business of holding public companies. We like companies to mature in our portfolio, and then they have an exit, and then we [inaudible]. In this case, we bought One Medical at $8.20, and the company is now trading between 25 and 30 dollars. We've been selling out of position, and we will be shortly out of the position. The other thing that we've been trying to do is be proactive in selling some of our private companies. It's the first time we've ever done this. We want to be opportunistic. We're not looking necessarily to trade our full positions. We still are looking to buy and hold positions until there's a liquidity event. But if we see an opportunistic situation and we want to take some money off the table, that's what we're going to be looking to do. We have sold about $5 million in estimated proceeds on a relative cost basis about $2.3 million. So we're getting about a 2X in some of these positions. And we'll continue to survey the portfolio for similar opportunities over [crosstalk].
So here is our portfolio as it stands right now. As a reminder, our largest position is in the upper left-hand corner and it goes down in valuation from left to right all the way down to the lower right-hand corner. SpaceX is now our largest position. SpaceX, as we just mentioned, has done a couple of up rounds of financing, followed by 23andMe and Marquetta. I mentioned Marquetta earlier because it had a really nice up round, a significant up round, earlier in the year, and that moved it organically to our third largest position. And then we have companies like Tasneem. Also, did a around with Salesforce. That's moved it up. We have companies like Trax, which is doing extremely well. We're getting positive updates. This also happens to be a company that's publicly announced an exit, potentially before the end of the year or Q1 of next year. You've seen companies like ChargePoint, which is going to be merging with a SPAC. So we're going to see an exit, hopefully in ChargePoint. Again, Udemy has moved up in our portfolio. They did a nice up round of financing. And, of course, [Palantir?] has been in the news lately, and they're looking to have an exit in the next week. So again, any of these companies, please feel free if you have further questions to contact us directly. But I think we feel we basically have built a very nice portfolio. All of our top 10 to 15 names are at near-term exits and we've also been able to build a deep bench of companies that can continue to drive returns in 2021, 2022, and beyond.
This is our performance. It's pretty straightforward, and it's located on our website. Year to date, we're up 5.1%, versus the Russell, which is down 5.5%. We've annualized since inception 7.31%, versus the Russell, 5.94%. Obviously, we've been doing quite well in the past year, up 8%, but I think the real point which isn't really on this slide is the fact that the stability around [inaudible] is quite nice. The standard deviation is about half as much as a public market, and I think that's what shareholders really like. Being able to wait for our returns and not have to worry about the volatility of the public market is really nice for them. And here's our inflows, redemptions, and cash deployed. Another pleasant surprise for us this year was cash inflows. You would have expect the inflows to really dry up, and they did a little bit in March and April, but we've had average inflows throughout the year, and they've picked up quite nicely in June, July, and August. And right now, we're in September and we're actually heading for our highest month in terms of inflows for the year. Redemptions. No surprise, of course, we've had fairly high redemptions back in March when the pandemic hit, followed up with this last redemption in June. We have a redemption coming up this September. However, we feel pretty [optimistic?] about that redemption period. We're hoping that it comes back to normal. But, no surprise, of course, we've had high redemptions in the year of a pandemic. In terms of cash deployed, we've deployed 11.4 million, as reported earlier. And you'll notice that in March, we deployed a lot of capital. $6.5 million. And we wanted to take advantage of the volatility that we saw when the pandemic hit and we're going to continue to do that. And we've done that in the past. Whenever there's a high period of volatility in the public markets are trading off, we want to take advantage of those price dislocations and add to existing portfolios, or try to get into names that are really hard to get into. And of course, at the very bottom. Portfolio distributions, we mentioned, were starting to make sales in One Medical and also in some of our private companies as well. [crosstalk]. Well, now, Christian that was a good update. Now, I'm going to pass it back to you for portfolio analysis since inception.
Great. Thanks for that. That was very helpful. So on this slide which you've seen in the past, this fund has invested in 93 companies since the inception of the fund, and roughly 40% of them have been realized, or in other words, exited from the portfolio. I would note that this excludes One Medical, which Kevin mentioned before. Even though there was an exit, the fund continues to hold some shares. So we do not consider this to be fully realized at this time. When we speak with you next, later this year, as Kevin was alluding too, and I touched on before, we do believe there are some exciting developments happening in this portfolio and we think there's a chance that there is additional exit activity to share with you at that time. About 48 of the 56 current active portfolio companies, which basically makes about 86% of the current portfolio, has just been added over the last few years. And what that implies is that the current portfolio is fairly [young?], with what we believe to be very high growth businesses that we expect will continue to grow into higher valuations over the next couple of years as they grow into their exits. Whether those exits be M&A or public offerings. And as Kevin noted, we have been more active at looking for opportunities to lock in partial realizations of some of these companies if the underlying price activity in the market justifies doing so. That said, we also do have a number of investments that are more than three years old. We came into this year thinking that [we'd be?] well-positioned for liquidity. Again, as we discussed earlier, this COVID crisis has had an impact and will likely push some of the underlying exits out, as we're seeing happen in the market.
In terms of the investment activity, we're clearly behind the pace of last year, which marked the funds most active deployment on record. That said, we do have a number of investments in process that we expect to close over the next couple of months and weeks. And so we believe that we're actually going to have a very busy fourth quarter. And as I touched on earlier, our pipeline is very strong. It's not evident in these numbers because this is only showing what's been completed. But the way that transactions work in this market is that once you lock in a agreement with a seller to purchase shares in a company, it doesn't just happen overnight. There tends to be a number of weeks, and in some situations, months until these transactions can close. And so we have a number of transactions that are actively in the kind of transaction, documentation phase and a number of companies that we are in the process of negotiating for. So again, we expect this to be a very active fourth quarter and we're very pleased with the pipeline activity that we're seeing.
So in terms of the fund outlook, we're going to continue to actively monitor the existing portfolio. In terms of how we plan to invest in this type of a market, of course, we'll maintain our discipline, as we always have, and we're going to continue seeking pricing dislocations in these high-quality assets. And we think in many situations that they do have a fairly short path to an exit. Typically, somewhere on the order of two to four years. It is paramount that we gain visibility, particularly in markets like this around the balance sheets of these companies, so we can compare them to how much capital these companies are actually burning. A burn rate refers to essentially how much money is a company spending relative to the income that it's generating. Because we want to make sure that these companies are well-capitalized, not only to execute on their business models but also to protect them if there happens to be an additional down cycle ahead.
We're keenly aware, as you can tell, that there has been sustained volatility and we understand that sustained volatility, particularly if it picks back up, it can impact the valuations and exit activity. But we are reminded again, as discussed earlier, that historically these are actually attractive times to be investing. If you look back into vintages historically where there have been periods like this of increased volatility and dislocation, they've often been very strong vintage performance years. And as we noted, as it relates to our portfolio, despite this being a very volatile year with the COVID-19 pandemic, we could still see a number of underlying exits in this portfolio before the end of the year. Perhaps even before the election, as Kevin pointed out. So with that said, we're going to turn it over to several questions before we wrap things up. While we're addressing the questions, I encourage you to please read through our disclaimers as well, which you can see on screen now. So, right. Let me read through the first question Kevin and we'll determine who's going to address it. The first one is, when do you anticipate the investment advisor transaction discussed to close, and are there any changes that we should be aware of? Kevin, you touched on that corporate update. Why don't you go ahead and address that?
Sure. Yeah, we touched on this earlier. We are anticipating the transaction to close hopefully in early to mid-December. There are a couple of items that we need to go through before we get to that. There is going to be a proxy vote. There has to be approval by our board of trustees. And so these items take a little bit of time. And so given that they will take a little bit time and how we know the process works, we believe that we should have a close sometime early to mid- December.
Great. Thanks, Kevin. The next question. What are your thoughts on the current state of the IPO market? I could touch that one. So again, we touched on this as well earlier. IPO volumes had been hitting levels we haven't seen since 2014 which again is very impressive when you consider the ongoing COVID-19 pandemic and a number of the challenges that we're experiencing in the macro-environment. Yeah. As we've said in the past, we do believe that in any market cycle there's going to be strong public market demand for innovative and differentiated high growth companies that have sustainable business models and that are going after these large addressable markets, particularly, if they could demonstrate a near- term path to break-even or profitability. And we also have to acknowledge that M&A continues to be historically the most active path for these late-stage companies to actually achieve liquidity. So it's not just IPOs which are now, as we've discussed, morphing into also SPACs and direct listings, but M&A activity is also another exit path that can provide liquidity to companies in this asset class. And again, we have a number of our portfolio companies that we believe are well- positioned to benefit from a lot of these dynamics. So let's move on to the third question. Should we expect to see more situations where the fund is seeking partial to full liquidity for some of its underlying holdings? And then the follow-on to that is, how do you determine whether it's the right time to sell? So Kevin you touched on that earlier. Why don't you pick up?
Yeah. As mentioned, the fund for the first time in the history of fund, and we've been around for seven years now, made some sales in our private companies before they had an actual exit. And you will see us do more of this. What we're really just trying to do is take advantage of fairly high valuations in that particular company. We're not necessarily trying to exit the full position, but we are just trying to take some money off the table if you will. And so we have-- we've been seeing a lot of that lately, which actually goes to the idea that it's not impossible to exit positions while there's still private. And that's a question that often comes up. How are you going to be receiving cash besides inflows from shareholders? Well we're proving right now that we can [sell supply?] the companies but we're doing it, again, opportunistically. And again, we're just trying to do it at times when valuations really make sense for us. So you will continue to see us do this, and I think that given what's going on in the market right now it provides us for opportunities more and more to do these types of sales.
Great. I think we have time for one last question, and not surprisingly, this is with regards to SPACs. So the question is, what are your thoughts on the growing popularity of SPACs? So again, if I refer you back to the slide that we had in the presentation, you can easily conclude that there has been a massive surge of SPAC activity year to date. And the easy answer for us is that having additional paths for our companies to achieve liquidity is a positive. And so whether it's a SPAC, whether it's an IPO from the traditional sense or a direct listing, our view is that there's always going to be pluses and minuses and trade-offs. And so to your question on SPACs, again, there's a pretty universal belief that they can provide a shorter time frame for a private company to establish that public market currency compared to the traditional IPO route. So maybe it shaves off a couple of months, which could be significant, especially in volatile markets. The counter to that is often, well, SPACs may not be as vetted to the extent that we see with traditional IPOs, which potentially could result in a less institutional-grade following that ultimately could drive more volatility in how they trade. So again, trade-offs. SPACs can be expensive. We talked about that in terms of the equity that a financial sponsor receives by supporting it. But the flip side is that could be well warranted if that sponsor brings a significant new capital and also perhaps domain expertise, operational expertise to the table. So again, we're excited that our companies have more opportunities to achieve liquidity. We would expect that a number of our companies are not only considering SPACs right now but that they may potentially actually choose them as the path to achieve that liquidity. So we're going to wrap things up because we're running short on time. Again, we always encourage you to reach out to us directly if you have any additional questions, particularly as it relates to today's webinar. We are very grateful for your continued support. We're very excited about the opportunity that we continue to have to execute on your behalf in this market. And I'm going to turn it over to Kevin for the final word.
Yeah. Thank you, Christian. I just wanted to echo those comments and say thank you so much for your support over the years. We have had our ups and downs, and our shareholders have really stuck with us. We have a lot of exciting things ahead of us, and we're just really excited about the future. So thank you very much. Stay safe, stay healthy, and we will talk to you soon.