
How to Short Uber (And Other Private Companies) - dsacco
https://medium.com/@avishbhama/how-to-short-uber-and-other-private-companies-7754b8fb7de1#.n9a7ih6fm
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dsacco
This article describes an effort to develop "unicorn swaps" to ultimately
provide access to shorting private companies. Matt Levine wrote about this
article this morning, summarizing the main points:

 _Here is a Medium post from Avish Bhama of Mirror, who is actually trying to
make unicorn swaps happen. His team met with 65 potential counterparties, got
a sense of the market appetite, drew up an ISDA and "partnered with a
valuation firm to help us mark these illiquid swap positions on their books."_

Levine also went on to describe how he would improve this effort:

 _First, I 'd do it at a bank...a tiny startup with a clever idea that meets
with 65 investors has barely scratched the surface of potential interest in
unicorn swaps. What about the mid-sized mutual fund manager who wants long
unicorn exposure but doesn't get invited into late-stage rounds? What about
the in-house hedge fund of a giant tech incumbent that wants to double down on
its plans to crush a unicorn competitor? What about the thousands of rich
private-wealth clients who fancy themselves tech geniuses? The target list is
long but the hit rate is low. You need a massive sales force, longstanding
relationships, standardized marketing materials, existing ISDAs and account
agreements._

Levine has also written about this in the past:

 _You could even imagine starting a Synthetic Unicorn Fund that invests in the
long side of a lot of UFSes, giving it exposure to big tech unicorns without
actually buying any shares. Register it with the Securities and Exchange
Commission -- it is not obviously worse than other exchange-traded products
that invest in illiquid derivatives with their sponsoring banks -- and you
could even sell it to retail investors as a way to get access to hot tech
startups before they go public. Then line up accredited-investor unicorn
skeptics to take the other side of the Synthetic Unicorn Fund 's swaps._

For his part, Bhama (the author of this Medium article) concludes that _" most
of the interest we received was one-sided interest on the top dozen Unicorn
names (e.g. everyone wanted to short Theranos, Dropbox and WeWork, or go long
Airbnb and Snap)"_.

