In my world, the public markets are a crowded stadium where everyone is watching the same game, reacting to the same plays in real-time. The information is largely commoditized. True alpha—outsized, non-correlated returns—is found by having a better lens, by seeing the game before it even reaches the stadium.
That lens is the private market.
The private market is the inefficient, opaque, and relationship-driven precursor to the public market. It's where innovation is born, where new economic models are tested, and where the talent and capital flows that will define the next decade are decided. Using its data isn't just an edge; it's like reading the script before the movie is released.
The Strategy: "Leading Indicator Arbitrage"
The core thesis is simple: Private market activity is a leading indicator for future public market performance, sector rotations, and disruptive threats. We don't use this data to predict day-to-day stock movements. We use it to build a directional, thematic, and fundamentally superior view of the economic landscape over a 6- to 24-month horizon.
This strategy is built on four pillars:
Pillar 1: Thematic Conviction & Sector Mapping
Objective:
Identify the next dominant economic themes before they become front-page news and Wall Street darlings.
Process:
Track the "Smart Money" Flow: We monitor the aggregate flow of capital from top-decile Venture Capital (VC) and Private Equity (PE) firms. Where are Andreessen Horowitz, Sequoia Capital, Blackstone, and KKR placing their bets? A surge of capital into a niche sub-sector (e.g., "AI-powered drug discovery," "decentralized physical infrastructure networks," or "carbon capture technology") is a powerful signal.
Identify "Funding Velocity": It's not just about the amount of money, but the speed. When a new startup in a new category raises a Seed, then a Series A, then a Series B in just 18 months, it signals immense validation and market pull. We map these high-velocity companies to identify emerging sectors.
Thematic Translation to Public Markets: Once we have high conviction in a theme (e.g., "The future of enterprise software is consumption-based pricing"), we map the entire value chain and identify the publicly traded "enablers" or "beneficiaries."
Pillar 2: Pre-IPO & Post-IPO Intelligence
Objective:
Make superior decisions on IPOs and newly public companies by understanding their entire private history.
Process:
Deconstruct the Cap Table: Before an IPO, we analyze the company's full funding history. Who invested at each stage (Seed, A, B, C)? What were the valuation step-ups? A company that took massive, undisciplined valuation jumps from non-pedigree investors is a red flag. A steady climb with backing from top-tier VCs is a green light.
Analyze Secondary Market Activity: Data from secondary markets (where private shares are traded pre-IPO) gives us a real-time, market-driven price signal. If a "hot" IPO's secondary shares are trading at a 30% discount to the rumored IPO price, it signals weak institutional demand. Conversely, a premium signals strong appetite.
Post-IPO Lockup Analysis: We know exactly which investors hold how many shares and when their lockup periods expire. This allows us to anticipate major supply shocks in the market for a newly public company and position ourselves accordingly.
Pillar 3: Competitive & Supply Chain Intelligence
Objective:
Gain a fundamental edge in analyzing public companies by understanding their private competitors and partners.
Process:
"Public Incumbent vs. Private Disruptor" Mapping: For every major public company we analyze (e.g., Salesforce), we map out its top 5-10 private, venture-backed competitors. We then track key metrics for these private disruptors:
- Talent Flow: Are they poaching senior engineers and salespeople from the public incumbent? (LinkedIn data is key here).
- Funding & Valuation: Is a competitor raising capital at a valuation that implies it's rapidly gaining market share?
- Product Velocity: Are they launching features faster?
This provides a powerful, forward-looking check on the public company's "moat." A classic example was watching Databricks' private growth to understand the competitive landscape for Snowflake.
Supply Chain Signal Detection: We identify fast-growing private unicorns and analyze their key suppliers. If a private logistics unicorn is doubling its fleet, who is the public company that sells them the telematics hardware or the warehouse management software? This is a derivative, "hidden" way to play private market growth through the public markets.
Pillar 4: M&A Prediction
Objective:
Anticipate M&A activity by tracking the behavior of PE firms and strategic acquirers.
Process:
Monitor PE "Tuck-in" Acquisitions: When a large PE fund acquires a public company and takes it private, that's just the start. We then monitor them for small, "tuck-in" acquisitions of private companies in the same sector. This signals their strategy and highlights which sub-sectors are ripe for consolidation.
Identify "Orphan" Companies: We look for well-run, technologically sound private companies that have failed to achieve escape velocity (e.g., stuck at Series B or C). These are prime acquisition targets for public companies looking to buy technology or talent. By identifying these targets, we can better predict the M&A strategy of public acquirers in the space.
The Best Sources of Private Market Data
Access to this data is the price of admission. It's not cheap, but the ROI is immense. My "Terminal" for the private markets consists of a multi-layered subscription stack:
The gold standard, especially for Private Equity, M&A, and detailed fund performance. Its greatest strengths are its deep, verified data on deals, valuations, investors, and limited partners (LPs). The level of granularity is unmatched.
The authority on the institutional investor side. Preqin gives you unparalleled insight into the LPs who fund the VCs and PE firms. It helps you understand fund performance, fundraising trends, and institutional appetite.
Excellent for tracking early-stage and venture-backed tech companies. It's often faster than PitchBook for new funding rounds and has broader coverage of smaller startups. Its API is powerful for systematic signal tracking.
These are the leading secondary marketplaces. They provide actual bid/ask data on the shares of late-stage private companies. This is the closest you get to a "real-time" price for a private asset.
This is a primary source. Companies raising capital from accredited investors must file a Form D. It's a raw, unfiltered, and free source of data on who is raising money and how much. It requires significant cleaning and processing but is invaluable.
Not a financial database, but a critical tool for qualitative analysis. It's the best source for tracking talent migration—the ultimate leading indicator of a company's health and trajectory.
These platforms provide access to call transcripts with former employees, customers, and competitors of both public and private companies. This is how you get the ground-truth qualitative color behind the quantitative data.
Subscription-based journalism that breaks news on private market deals, hires, and internal strife long before the mainstream press. This is a source of alpha in itself.
Risk Management
Finally, a word of caution. Private data is messy, often lags, and can be self-reported.
Triangulate: Never rely on a single source. Cross-reference PitchBook data with Form D filings and news from The Information.
Differentiate Hype from Reality: Valuations can be vanity metrics. Focus on talent flow, customer adoption (from expert calls), and capital efficiency.
Correlation is not Causation: A theme can be hot in VC but fizzle out before it translates to public market profits. The private data is an input to your thesis, not the entire thesis itself.