Private Market Update: February 2021
Just one month into 2021, and we see the continuing trend from the latter part of 2020 – the IPO market is hot and getting hotter. Here’s what happened in January and what to know about the private markets as we look ahead.
Strong pipeline, varying exit strategies
Roblox, Compass, Coinbase, and UiPath are all still in the exit pipeline, with anticipated exits on the near-term horizon for each. Following Palantir, Spotify and Slack, Coinbase announced it would forego a traditional IPO and proposed a direct listing to reportedly avoid diluting their existing shareholders and handing over cheap stock to new investors. This would be the first direct listing of the year.
Private companies are also increasingly exploring exit opportunities through reverse mergers via special purpose acquisition companies (SPACs). This structure has sparked investors interest with reports of well-known names like 23andMe, Bird and WeWork announcing last month either an exploratory or intended SPAC merger. 23andMe is pursuing a public listing through a reverse merger with VG Acquisition Corp.; the transaction would flush 23andMe with $984 million in cash, which would be available at close, and will value the company near $3.5 billion.
Despite controversial headlines, investor interest in Robinhood soared on the Forge private marketplace even as the company raised emergency funds from its existing investors to build cash reserves as they faced scrutiny over the now-lifted trading restrictions placed on certain stocks.
In January, the Forge platform saw unmatched traction – up 18% from December 2020 (a record month) – indicating record-high interest in shares of unicorn companies. Last month’s activities also resulted in the highest amount of funding in the US private markets in the past three years, with venture capitalists adding $16.7 billion into the market across 220+ deals. On top of this, the average deal size was $74 million compared to a $48 million average in 2020.
This flurry of high stakes activity on the private markets is showing no signs of slowing down, especially as we recently saw 15 new private companies achieve unicorn status.
2021 is shaping up to be an exciting, record-breaking year in the private markets. Stay in the know, and sign up for a monthly private market update from Forge here.