As unicorns multiply, so does demand for access to their value creation
The number of private companies valued at more than $1B passed the 800 mark for the first time this year accounting for $2.8T in aggregate value1.
More unicorns are being minted than ever — about one new one every business day — far outpacing the number that go public. And the unicorns that do eventually go public on average take more than 12 years to do so.
By the time unicorn companies reach the public markets, they are significantly larger than they were in decades past, meaning much of the growth and value that is created during their formative years took place in the private markets.
This is driving demand for greater access to the private markets and that creates opportunity for equity holders. Thanks to private market innovation, the employees, shareholders and early investors of private companies now have more opportunities to leverage their own equity during a private company’s life to achieve their own financial objectives earlier and to feed accredited investors’ appetite for potentially fast-growing private stock.
Opportunity is knocking
Historically, private equity investing and private share trading have been reserved for a narrow club of sophisticated and highly-capitalized investors with the means to source supply and negotiate price. But new markets that aggregate supply and demand and automate deal flow have opened up access to a broader swath of investors — and to a growing number of sellers who have pressing financial goals.
The secondary market allows shareholders to transfer their shares to accredited investors for liquidity (i.e. cash) before the company goes public. This is an option for current and former employees, early investors and other shareholders who seek liquidity for a number of reasons: for example, perhaps they need a down payment for a home or need to pay a child’s college tuition; perhaps the vast majority of their net worth is tied to their company’s stock and they want to diversify their holdings; or perhaps they’re a limited partner in a venture fund who wants to sell a percentage of their holdings in a company so they can reinvest in new opportunities.
And as new (and more) players are aiming to participate in the private market ecosystem, there’s strong demand from accredited investors looking to obtain private company shares from those looking to sell in the growing number of private unicorn companies.
Forge is here to help
Forge Markets provides a solution for employees and other shareholders looking to unlock liquidity. Those interested in selling a portion of their equity before their company goes public have a platform and a team at Forge behind them to support and guide the process. The platform also provides accredited investors early access to companies pre-IPO. It’s a win-win.
And, we have the track record to prove it. Since inception, Forge has facilitated over $10 billion across 19K transactions across 70 countries.
Learn more here.
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The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc. Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.
This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.