The private markets are becoming increasingly less private
The private and public markets are beginning to blend, but this didn’t happen overnight. A trend started around ten years ago of private companies staying private longer –bringing us a current massive class of 650+ private unicorn companies valued at $1B+. Today, it can be difficult to find a company that was valued at below $10B before going public, while some companies are valued at $50B or more when they exit.
This has created an increasing desire from public market investors who are looking for the opportunity to invest in companies pre-unicorn status and participate early on in the innovation and value creation of private businesses. However, gaining access to and understanding the nuances of the private market is much more challenging compared to the public market.
Clearing muddy waters
The public market is generally efficient and incredibly transparent, with a high volume of trading occurring in short amounts of time. The private markets, on the other hand, are more opaque. Jane Atherton, managing director of investments at Temasek, explains that most investments done in the private markets are done in a bespoke and highly curated manner that isn’t easily scalable.
But we’re starting to see a nascent yet critical private security infrastructure being built to combat these challenges and meet evolving demands for easier access and frictionless participation on the private market.View quick clip below.
These demands are coming from the companies themselves, which are looking to provide more liquidity opportunities to employees, more seamlessly run capital-raising programs to appease shareholders, and better understand their valuation. It’s also coming from accredited investors who are seeking to invest earlier a private company’s lifecycle, retail investors who are showing greater interest in new investment opportunities (i.e. they now have access to IPO shares thanks to platforms like Robinhood), and from banks and other institutional organizations that are looking to the private markets for a new revenue source through new products.
We believe private market waters will someday be as clear as the public market, though creating this vibrant, transparent ecosystem will take time and resources. New technologies and digital innovations, paired with the increased demand from all angles and players, will certainly help speed up these efforts.
A marketplace like Forge that has liquidity sourcing and price discovery insights is an essential part of bringing this modern infrastructure to life – a piece of the puzzle that can continue to foster innovation and create seamless experiences for companies and investors alike on the private market.