Private Market Update: January 2021
The end of 2020 set us up for what will surely be an interesting start to the year for the private markets. Here’s what happened (or didn’t happen) in December as well as the trends emerging in the private markets heading into the new year.
Growing tech unicorn pipeline
The pipeline for tech unicorn IPOs continues to grow as the birth rate of new unicorns continues to far outpace exits, and while tech companies continue to perform well on the public markets.
Both online gaming platform Roblox and fintech firm Affirm delayed offerings in December as the companies pursued alternative listing options to help them maximize pricing (we explain some of those alternatives here), though a bursting exit pipeline has already seen Affirm, which debuted Jan. 13, pop 100% on its first day.
A December flurry, more exits anticipated in 2021
Investors flocked to the Forge marketplace last month, registering December as the busiest month of the year in terms of interest placed on the platform – and outpacing September’s previous record high by 75%. That was the month we saw public offerings from five of seven top unicorns on our watchlist.
The continued performance of technology companies on the public markets is likely driving the record interest in late-stage private tech companies as investors look for early access to one of the best-performing asset classes. Robot process automation software provider Automation Anywhere and trading platform Robinhood were the most sought-after companies on the Forge platform last month. A surge of interest in Robinhood corresponded with reports that the stock-trading app was starting conversations with underwriters for a potential 2021 IPO.
2020’s total VC funding hit record high
With venture capitalists pumping ~$9.7B into the U.S. private markets in December alone, total funding for the year hit $113.9B (Pitchbook). This makes 2020 the most active year in the U.S. private market in terms of both total funding and number of deals in the last four years, surpassing 2018’s record highs.
Effects of the pandemic played a large role in this, of course, with fintech, business productivity and healthcare sectors experiencing a spike in demand and influencing funding trends throughout the year.
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