The Curious Case of Destiny Tech 100

On March 26, 2024, the Destiny Tech100 (DXYZ) fund began trading on the NYSE. DXYZ aims to hold stakes in some of the top VC private tech companies, providing public investors access to companies like SpaceX, Impossible Foods and Discord.

DXYZ fund raised $100M and has since deployed approximately 90% of this capital across 23 privately held startups, with SpaceX comprising 36% of its holdings.

As of today, DXYZ’s market cap is “only” $190M (1.9x! the capital raised). However, back in April, it peaked at $1.2B (12x! the capital raised).

What could possibly explain this “curious” surge in DXYZ stock?

Let’s then examine its value proposition:

* DXYZ says that it “takes a structure-agnostic approach to portfolio construction, participating in primary rounds driven by the company as well as secondary purchases from existing shareholders” – Okay, primary as a concept, but this is the moment to take advantage of the deep discounts in the secondary market.

* DXYZ looks for “asset-light, software, and platform-based business models” – I guess no one can classify SpaceX, Axiom Space (development of commercial space stations), Boom Supersonic (design and production of supersonic passenger airplanes), DXYZ’s three largest holdings, as asset-light or software-based companies.

* “We’ve seen that our flexibility to invest in multiple classes of equity, equity-linked, and equity-related securities enables this [DXYZ’s portfolio execution] effectively” – by our experience, beware of forward contacts, it’s a dangerous zone!

* DXYZ invests simultaneously in two categories of private companies:

“i) Large Cap: These companies, valued at $10B+, provide stability to the portfolio while still sitting in the high-growth tech category” — well, Stripe (a DXYZ portfolio company), halved its valuation to $50B in May 2023. Similarly, Klarna (another DXYZ portfolio company), cut its valuation from $45B to $6.7B in July 2022

“ii) Medium Cap: As newer members of the unicorn ranks, valued between $750M – $10B, these companies may have the potential to yield a 10-50x return” – well, Fabrica Ventures expectation is a 2.5x return (and not 10-50x!), which is typical for late-stage ventures.

Conclusion

It is always possible to make money through speculating, even by marketing something old as new.