EFTA00810312.pdf

Valar Global Fund III LP (a Delaware Limited Partnership) Financial Statements Year Ended December 31, 2018 The report exemparging these financial statements was imsed by BOO USA. LLP. a Delaware limited liability partnership and the U.S. mentor of BDO International Linked. a UK company 'anted by "manta.. IBDQ EFTA00810312  Valar Global Fund III LP (a Delaware Limited Partnership) Financial Statements Year Ended December 31, 2018 EFTA00810313  Valar Global Fund Ill LP (a Delaware Limited Partnership) Contents Independent Auditor's Report 3 Financial Statements Statement of Assets, Liabilities and Partners' Capital 5 Schedule of Investments 6-7 Statement of Operations 8 Statement of Changes in Partners' Capital 9 Statement of Cash Flows 10 Notes to Financial Statements 11 - 20 EFTA00810314  0 One Bush Street IBDO Suite 1800 San Francisco. CA 94104 Independent Auditor's Report To the General Partner of Valar Global Fund Ill LP (a Delaware Limited Partnership) We have audited the accompanying financial statements of Valar Global Fund III LP (a Delaware Limited Partnership), which comprise the statement of assets, liabilities and partners' capital, including the schedule of investments, as of December 31, 2018, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements. The General Partner's Responsibility for the Financial Statements The General Partner is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by the General Partner, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Valar Global Fund III LP as of December 31, 2018, and the results of its operations, its changes in partners' capital, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. USA, LLE March 20, 2019 E00 USA. ILO. a Delaware limited liability partnership. is the U.S. member of EDO International Limited. a Ulf company limited by guarantee. and forms part of the international BDO network of independent member firms. EDO is the brand name for the 8D0 network and for each of the BOO Member Firms. 3 EFTA00810315 Financial Statements EFTA00810316  Valar Global Fund Ill LP (a Delaware Limited Partnership) Statement of Assets, Liabilities and Partners' Capital December 31, 2018 Assets Investments, at fair value (cost $56,289,593) $ 167,590,032 Cash 787,228 Interest receivable 15,300 Total Assets $ 168,392,560 Liabilities Contributions received in advance $ 525,000 Due to affiliates 4,668 Total Liabilities 529,668 Partners' Capital Cumulative capital contributions $ 61,486,320 Syndication costs (170,655) Cumulative net operating loss (4,753,212) Net unrealized appreciation on investments 111,300,439 Total Partners' Capital 167,862,892 Total Liabilities and Partners' Capital $ 168,392,560 See accompanying notes to financial statements. 5 EFTA00810317  Valar Global Fund Ill LP (a Delaware Limited Partnership) Schedule of Investments December 31, 2018 Privately Held Stock Other Total Unrealized Geographic Number Appreciation Classification' of shares Cost Fair Value Cost Fair Value Cost Fair Value (Depreciation) Stash Financial. Inc. (f/k/a Collective Returns. Inc.) United States Series B Preferred Shares 1.647.819 $ 10.200.000 $ 33.774.753 S $ $ 10.200.000 S 33.774.753 $ 23.574.753 Series A Preferred Shares 693.529 1.937.997 14.215.014 1.937.997 14.215.014 12.277.017 Series C Preferred Shares 217.494 2.692.576 4.457.896 2.692.576 4.457.896 1.765.320 Series 0 Preferred Shares 46.103 679.991 944.957 679.991 944.957 264.966 Olinda S.A.S (cVb/a Oonto) France Series A Ordinary Shares 26.165 5.378.771 34.043.516 5.378.771 34.043.516 28.664.745 Series Seed Ordinary Shares 6.351 344.546 8.263.343 344.546 8.263.343 7.918.797 N26 GmbH Germany Preferred B Shares 1.098 4.334.464 24.419.437 4.334.464 24.419.437 20.084.973 Octane Lending. Inc. United States Series A-Ill Convertible Preferred Stock 1.562.226 8.473.658 12.460.760 8.473.658 12.460.760 3.987.102 Series B Convertible Preferred Stock 294.122 2.040.001 2.346.001 2.040.001 2.346.001 306.000 Common Stock 129.127 516.508 1.029.954 516.508 1.029.950 513.446 Petal Card. Inc. United States Series A Preferred Shares 4.485.326 5.405.889 11.693.245 5.405.889 11.693.245 6.287.356 Series B Preferred Shares 652.090 1.699.999 1.699.999 1.699.999 1.699.999 Series 6-1 Preferred Shares 161.325 378.517 420.574 378.517 420.574 42.057 Common Stock 78.100 70.532 203.607 70.532 203.607 133.075 Coya AG Germany Series A Preferred Shares 11.914 4.422.963 7.927.383 4.422.963 7.927.383 3.504.420 Jetty National. Inc. United States Series A Preferred Shares 2.375.745 5.505.551 7.419.454 5.505.551 7.419.454 1.913.903 Spaceship Financial Services Pty Ltd Australia Series Al Preferred Shares 20.878 521.876 599.550 521.876 599.550 77.670 See accompanying notes to financial statements. 6 EFTA00810318  Valar Global Fund Ill LP (a Delaware Limited Partnership) Schedule of Investments December 31, 2018 Privately Held Stock Other Total Unrealized Geographic Number Appreciation Classification• of Shares Cost Fair Value Coat Fair Value Cost Fair Value (Depreciation) Brolly UK Technology Limited United Kingdom Series Seed Preferred Shares 592.449 S 2' 0.58,2, S 216.478 $ - $ - $ 210,580 $ 216,178 $ 5898 Convertible Notes 237,575 216,512 237,575 216,512 (21.063) Peak Ventures Rod United States Limited Partnership Interests 371,000 374,000 371,000 374,000 Seed Platform, Inc. United States Simple Agreement for Future Equity 310,000 340,000 310,000 310,000 Symple. Inc. United States Simple Agreement for Future Equity 217,600 217,600 217,600 217.600 Mirror Al Inc. United States Convertible Notes 170,000 170,000 170.000 170.000 Anduril Industries. Inc. United States Series Seed Preferred Stock 123.113 68.000 68,000 68.000 68.000 Brat Inc. United States Series Seed Preferred Stock 83.563 67.999 67.999 67.999 67.999 Total Investments, all in the technology industry $ 54,950,418 $ 166,271,920 $ 1,339,175 $ 1,318,112 $ 56,289,593 S 167,590,032 S 111,300,439 Percentage of Partners' Capital 99.05% 0.79% 99.84% ' M used herein. Geographic Classification' has the meaning given to it under applicable AICPA guidelines. For these purposes. 54.75% of Partners Capital is classified in the United States. 25.20% in France. 19.27% in Germany. 0.36% in Australia and 0.26% in the United Kingdom. See accompanying notes to financial statements. 7 EFTA00810319  Valar Global Fund Ill LP (a Delaware Limited Partnership) Statement of Operations Year Ended December 31, 2018 Investment Income Interest income $ 11,092 Expenses Management fee 1,826,250 Professional fees 190,021 General and administrative 88,279 Total expenses before management fee waiver 2,104,550 Less: management fee waiver (142,080) Less: management fee reduction for syndication costs (63,000) Total expenses after management fee waiver and reduction 1,899,470 Net Operating Loss (1,888,378) Unrealized Appreciation on Investments Balance at beginning of year 25,240,354 Balance at end of year 111,300,439 Net Change in Unrealized Appreciation on Investments 86,060,085 Net Increase in Partners' Capital Resulting from Operations $ 84,171,707 See accompanying notes to financial statements. 8 EFTA00810320  Valar Global Fund Ill LP (a Delaware Limited Partnership) Statement of Changes in Partners' Capital Year Ended December 31, 2018 General Limited Partner Partners Total Partners' Capital, December 31, 2017 S 5,034,781 $ 67,739,704 $ 72,774,485 Capital contributions 22,200 10,957,500 10,979,700 Syndication costs (63,000) (63,000) Net operating loss (2,680) (1,885,698) (1,888,378) Net change in unrealized appreciation on investments 861,625 85,056,380 85,918,005 Recapture of General Partners deemed contributions - priority allocation 142,080 142,080 Carried interest reallocation 16,621,536 (16,621,536) Partners' Capital, December 31, 2018 $ 22,679,542 $ 145,183,350 $ 167,862,892 See accompanying notes to financial statements. 9 EFTA00810321  Valar Global Fund Ill LP (a Delaware Limited Partnership) Statement of Cash Flows Year Ended December 31, 2018 Cash Flows from Operating Activities Net increase in partners' capital resulting from operations $ 84,171,707 Adjustments to reconcile net increase in partners' capital resulting from operations to net cash used in operating activities: Net change in unrealized appreciation on investments (86,060,085) Purchase of investments (5,257,083) Changes in operating assets and liabilities: Increase in interest receivable (8,500) Decrease in due to affiliates (4,890) Net Cash Used in Operating Activities (7,158,851) Cash Flows from Financing Activities Capital contributions, net of change in contributions received in advance and contributions receivable 11,504,790 Line of credit proceeds 2,090,000 Line of credit repayments (6,090,000) Syndication costs (63,000) Net Cash Provided by Financing Activities 7,441,790 Net Increase in Cash 282,939 Cash, beginning of year 504,289 Cash, end of year 787,228 Supplemental Disclosures of Cash Flow Information Conversion of convertible notes and accrued interest to preferred shares 900,393 Interest paid during the year 17,655 See accompanying notes to financial statements. 10 EFTA00810322  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements 1. The Partnership The accompanying financial statements include the accounts of Valar Global Fund Ill LP (the "Partnership"). The Partnership was organized as a Delaware limited partnership on July 1, 2016 (Commencement) to make investments in early-stage technology companies for long-term capital appreciation. The Partnership will continue until the tenth anniversary of the final closing date, unless extended in accordance with the limited partnership agreement (the "Agreement"), or by the election of the general partner. The general partner of the Partnership is Valar Ventures GP Ill LLC (the "General Partner"), a Delaware Limited Liability Company. Valar Ventures LLC (the "Management Company") serves as the management company of the Partnership. If a limited partner informs the General Partner that it must abstain from any specific vote taken or consent granted by the limited partners under the Agreement or the Partnership Agreement of a parallel fund, such limited partner's interest shall be deemed not to be outstanding for purposes of such determination and such limited partner shall be excluded from such vote or consent. Allocation of Net Income or Net Loss The allocation of income and loss is performed in accordance with the executed Agreement. The allocation of ordinary income or ordinary loss, defined as all income received by the Partnership from investments of idle funds in short term securities, shall be allocated to the capital accounts of all partners in proportion to their respective partnership percentages. The allocations have been calculated and financial statements presented on a hypothetical liquidation basis, as prescribed by accounting principles generally accepted in the United States of America ("U.S. GAAP"). First, realized profits from sale or disposition of securities will be allocated to the General Partner equal to the aggregate amount of Fee Adjustments, as defined in the Agreement. Remaining profits and losses will be allocated: a) Until the cumulative amount allocated to each limited partner is equal to 300% of such limited partner's capital commitment, 80% of the profits will be allocated to the partners in proportion to their respective partnership percentages and 20% to first restore any previously allocated contingent losses of the partners and the remaining profits shall be allocated to the General Partner. b) From and after the time that the cumulative amount allocated to each limited partner is equal to 300% of such limited partner's capital commitment, allocation of cumulative profits shall be made 75% to all partners in proportion to their respective partnership percentages and 25% to first restore any previously allocated contingent losses of the partners and the remaining profits shall be allocated to the General Partner, until the cumulative amount distributed to each limited partner is equal to 600% of such limited partner's capital commitment. c) From and after the time that the cumulative amount allocated to each limited partner is equal to 600% of such limited partner's capital commitment, allocation of cumulative profits shall be made 70% to all partners in proportion to their respective partnership percentages and 30% to first restore any previously allocated contingent losses of the partners and the remaining profits shall be allocated to the General Partner. 11 EFTA00810323  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements Losses of the Partnership are allocated as follows: a) First, to the extent of the profits allocated as outlined above, items of loss shall be allocated in proportion to and in reverse order of such profit allocations. b) Any remaining items of loss shall be allocated 20% to the General Partner and 80% to all partners in proportion to their respective partnership percentages. If after these allocations result in a balance of the General Partner that is less than the product of (i) the sum of the Adjusted Capital Account balances of all Partners multiplied by (ii) the quotient of (A) the sum of (x) the amount of the General Partner's capital contributions made in cash as of such time plus (y) aggregate allocations of net Profit to the General Partner pursuant to waived management fees divided by (B) the sum of (x) the amount of all of the Partners' capital contributions made in cash as of such time plus (y) aggregate allocations of net Profit to the General Partner pursuant to waived management fees, then an amount (the "Contingent Loss") shall be reallocated from the General Partner's capital account to all of the partners' capital accounts in proportion to their respective partnership percentage. There is no contingent loss balance at December 31, 2018. Distributions The General Partner may make a distribution of cash or marketable securities to the partners in proportion to their respective partnership percentages until each such partner has received distributions in an amount equal to such partner's aggregate capital contributions, less the net ordinary losses, if any, previously allocated to such partner. First, to the partners in proportion to their respective partnership percentages until each such partner has received distributions in an amount equal to such partner's aggregate capital contributions less the net Ordinary Losses. Second, until the cumulative amount distributed to each limited partner is equal to 300% of such limited partner's capital commitment, distributions shall be made 80% to all partners in proportion to their respective partnership percentages and 20% to the General Partner. Third, from and after the time that the cumulative amount distributed to each limited partner is equal to 300% of such limited partners capital commitment, distributions shall be made 100% to the General Partner until the General Partner has received aggregate distributions equal to 25% of the cumulative distributions. Fourth, until the cumulative amount distributed to each limited partner is equal to 600% of such limited partner's capital commitment, distribution shall be made 75% to all partners in proportion to their respective partnership percentages and 25% to the General Partner. Fifth, from and after the time that the cumulative amount distributed to each limited partner is equal to 600% of such limited partners capital commitment, distributions shall be made 100% to the General Partner until the General Partner has received aggregate distributions equal to 30% of the cumulative distributions. Any remaining distribution shall be made 70% to all partners in proportion to their respective partnership percentages and 30% to the General Partner. 12 EFTA00810324  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements The General Partner may at any time waive a distribution of cash or marketable securities that would otherwise be made and instead make such distribution 100% to all partners in accordance with their respective partnership percentages; provided, however, that the Partnership may make subsequent distributions of cash to the General Partner to the extent of any such waived distribution at such times as the General Partner shall determine. Whenever more than one type of marketable securities are being distributed in kind in a single distribution or whenever more than one class of marketable securities of a portfolio company are distributed in kind by the Partnership, each partner shall receive its ratable portion of each type, class or portion of such class of marketable securities distributed in kind (except to the extent that a disproportionate distribution is necessary to avoid distributing fractional shares). Marketable securities distributed in kind shall be subject to such conditions and restrictions as the General Partner determines are legally required or appropriate. Whenever types or classes of Securities are distributed in kind, each partner shall receive its ratable portion of each type or class of securities distributed in kind. Each partner shall be paid in cash after the end of each fiscal year during the term of the Partnership an amount equal to the net taxable income allocated to such partner as a result of such partner's ownership of an interest in the Partnership for the current fiscal year multiplied by the highest blended federal, state and local marginal income tax rate then applicable to an individual residing in any state applied by taking into account the character of the taxable income in question (i.e., long-term capital gains, ordinary income, etc.); provided, however, that the General Partner shall not be required to make any such distribution if the total amount to be distributed to all partners is less than $1,000,000. 2. Significant Accounting Policies Basis of Presentation The financial statements are presented in accordance with U.S. GAAP. The Partnership is an investment company and applies accounting and reporting guidance in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services - Investment Companies." Use of Estimates U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Valuation of investments at Fair Value - Definition and Hierarchy The Partnership follows the guidance in the Fair Value Measurements and Disclosures Topic of FASB ASC 820. Under this guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. 13 EFTA00810325  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements In determining fair value, the Partnership uses various valuation approaches, as may be appropriate in the circumstance, including market, income and/or cost approaches. Investments are valued on a quarterly basis taking into consideration any changes, projections and assumptions, as well as any changes in economic and other relevant conditions. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset developed based on market data obtained from sources independent of the Partnership. Unobservable inputs are inputs that reflect the Partnership's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The valuations of the Partnership's investments are reviewed quarterly by the General Partner. The valuations are further tested by comparison to actual sales prices obtained on disposition of the investments. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets that the partnership has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 - Valuations based on inputs that are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Level 3 - Valuations based on inputs that are unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment and estimation. The availability of valuation techniques and observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Partnership in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Partnership's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. 14 EFTA00810326  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements The valuation methodologies used to estimate the fair value the Partnership's classes of investments is described below: Investments in Portfolio Companies - The General Partner primarily uses a market approach in estimating the fair values of its investments in portfolio companies. This approach usually includes referencing recent or pending transactions in the same or similar securities of the issuer. Investment carrying value may also be supported by reference to observable valuation measures for comparable companies, such as an enterprise value or acquisition value to revenue multiple, where unobservable data of the issuer is viewed in the context of a relevant range of comparable companies or transactions. Such information may be derived from unaudited input sources. In certain instances, the General Partner may use a combination of the market and income approaches for certain portfolio investments. The Partnership's investments may also be valued at cost for a period of time after an investment is made as the best indicator of fair value. Debt instruments are recorded at fair value using cost. In assessing portfolio investment companies for impairment, management considered these companies' product line portfolio, customers and related commercial agreements, labor agreements and other factors for which identifiable cash flows are largely independent. The fair values of venture capital investments are determined by reference to multiple inputs, including: the original transaction price, recent transactions in the same or similar securities, completed or pending third-party transactions in the same or similar securities, subsequent rounds of financing by the issuer, recapitalization of the issuer, expected near term acquisition or merger of the issuer, significant changes in operating performance, financial ratios and cash flows of the issuer, historical and projected revenues, public market or private market transactions, valuations for comparable companies, information obtained from portfolio company 409A valuations, and other measures which, in many cases, are unaudited at the time received. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (e.g., multiplying a key performance metric of the investee company such as revenues by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. The fair value measurement of such investments does not include transaction costs that may have been capitalized as part of such investments' cost basis. Interest Income Interest income represents interest earned from bank interest and the Partnership's investments in debt instruments. Interest is recorded on an accrual basis. Taxes on Income The Partnership accounts for uncertainty in tax positions by determining whether a tax position of the Partnership is more likely than not to be sustained upon examination, including the resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a more likely than not position of being realized upon ultimate settlement with the relevant taxing authority. 15 EFTA00810327  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements The Partnership files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Partnership is subject to examination by federal, state, local and foreign jurisdictions, where applicable. As of December 31, 2018, the tax years that remain subject to examination by the major tax jurisdictions (U.S. Federal and California State) under the statute of limitations are from 2016 forward. The Partnership accrues all amounts under relevant tax laws as incurred. As of December 31, 2018, the General Partner has determined that the Partnership does not have a liability for uncertain tax positions nor did the Partnership incur a liability for interest and penalties. The General Partner does not anticipate any unrecognized tax benefits in the next twelve months that would result in a material change to the Partnership's financial position. Foreign Currency Transactions Investment securities and other assets and liabilities denominated in foreign currencies are revalued into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Partnership does not isolate the portion of the results of operations resulting from changes in foreign currency rates on investments from the fluctuations arising from changes in unrealized or realized gains and losses from investments. Recent Accounting Pronouncement In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update CASU -9 2018-13- Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which includes amendments intended to improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies and adds certain disclosure requirements and affects companies that are required to include fair value measurement disclosures. For nonpublic entities, the disclosure for the changes in the unrealized gains and losses included in earnings for recurring Level 3 fair value measurements held at the end of the period are no longer required. In lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption for amendments that remove or modify disclosures are permitted and the Partnership has early adopted these amendments. 3. Fair Value Measurements The Partnership's assets recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC 820. See Note 2 for a discussion of the Partnership's policies regarding this hierarchy. 16 EFTA00810328  Valar Global Fund Ill LP (a Delaware Limited Partnership) Notes to Financial Statements The following table presents the investments carried on the statement of assets, liabilities and partners' capital by level within the valuation hierarchy as of December 31, 2018. Investments at Fair Value as of December 31, 2018 Level 1 Level 2 Level 3 Total Preferred stock - $ $ 165,038,359 $ 165,038,359 Common stock 1,233,561 1,233,561 Partnership interest' 374.000 Other 944.112 944.112 Total investments - $ $ 167,216.032 $ 167,590.032 'Under ASC 820. partnership interests presented in the table above are not required to be categorized within the fair value hierarchy, as fair value of these investments are determined using NAV as a practical expedient. The following table includes a summary of activity for the year ended December 31, 2018 for investments classified within Level 3. The classification of an investment within Level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement. Preferred Common Stock Stock Other Total Purchases $ 4,419,990 $ $ 837,093 $ 5,257,083 There were no transfers between Level 3, Level 2 or Level 1 investments during the year presented. At December 31, 2018, all Level 3 investments were valued based on most recent observable transaction price. While the General Partner believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Those estimated values may differ significantly from the values that would have been used had a readily available market for such investments existed, or had such investments been liquidated, and these differences could be materia