Insights
About
About
For Professional Investors Only
Past performance is not a reliable indicator of future results

Private Market Update - May 2024

Private market continues positive upward momentum in April

Key Takeaways

  • The Forge Private Market Index was up 0.7% in April, outpacing many public market ETFs for the month

  • Core private market metrics remained roughly in line with prior months, reinforcing signs of a potential market rebound

  • Cybersecurity unicorn Rubrik’s IPO and a growing IPO calendar suggest more exit activity could be ahead

Overview

In April, the Forge Private Market Index rose by 0.7%.1 The positive performance stands in contrast to public equity markets, which declined during the month on fears that sticky inflation and a resilient U.S. economy could cause the Federal Reserve to maintain elevated interest rates for a longer-than-expected period of time.2 The private market has historically moved more slowly than public equity markets on both the upside and downside, so strength in the public markets has the potential to translate into better prospects for private companies as well after a lag period.

During the month, the Forge Private Market Index was led by three top-performing companies in the index.3 Defense technology company Anduril (+39.1%) was the best-performing index constituent in April, with the strong month adding further to its +41.7% year-to-date (YTD) performance through April 30, 2024. Rippling (+24.0%), an IT and HR solutions provider, was the second-best company in the month and is up +49.7% YTD through April 30, 2024. Finally, cloud protection company Vectra Networks was up +20.9% for both the month and the YTD period through April 30, 2024.

Several index constituents were the leading detractors during the month. Logistics and technology company Flexport declined -5.1% in April and is down -16.8% for the year. Video game creator Epic Games was down -8.3% in April, though the company remains up +29.3% for the YTD period through April 30, 2024 — a sign of the dynamic price movements that are possible among private companies. Meanwhile, Asapp (-52.8%), an AI cloud provider for contact centers, was the worst performer for the month and is down -67.1% for the year through April 30, 2024.

The IPO market continues to emerge from its slumber, as two venture-backed companies completed IPOs in April. Tech marketing company Ibotta (NYSE: IBTA) — which was backed by Walmart, among other investors — raised $577 million in its debut, above expected levels.4 Ibotta stock’s offering was priced at $88 and ended its first trading day at $103.25, posting a 17% rise and has generally remained above $100.5

Cybersecurity unicorn Rubrik (NYSE: RBRK) also went public during the month, pricing its IPO at $32 a share and raising $752 million at a $5.6 billion valuation.6 Rubrik was up +16% on its first day, closing at $37 per share, but has since declined and is trading closer to its opening price. 7

Looking ahead, the IPO pipeline continues to grow,8 a symptom of companies having delayed their public debuts but a sign that more might be on the way. Of note, there were only 287 IPOs in the first quarter of 2024, a pace below even the lows of recent years, suggesting that the pipeline continues to build.9 If the IPOs of venture-backed companies continue to be received favorably by the market (based on higher opening prices and resilient performance from their debuts), then what was formerly a headwind has the potential to turn into a tailwind.

Overall, the momentum in the private market from last month showed no signs of slowing in April. If those trends continue moving forward, valuations for private companies could see a potential rebound emerging after a long period of challenging conditions.

The Details

The Forge Private Market Index was up 0.7% in April

During April, the Forge Private Market Index posted positive performance of 0.7%.10 For the month, the Forge Private Market Index outpaced many comparable public equity ETFs, including Invesco QQQ ETF,11 which tracks the tech-heavy Nasdaq-100; the iShares Russell 2000 ETF (IWM),12 which tracks the performance of small-cap companies; and the Renaissance IPO ETF (IPO), which tracks an index of U.S. companies with recent IPOs.13

In April, the distribution of premiums/discounts to the last primary funding round remained roughly in line with prior time periods. For the month, private companies on Forge Markets traded at a median discount of -51%, which is roughly consistent with prior quarters. The top 10% companies traded at a +29% premium to their last primary round valuation, while the bottom 10% rose slightly to a -73% discount.

In April, the median bid/ask spread on Forge Markets declined further to 8.8%, remaining below the four-year average.

IOI data suggests continued demand for private company transactions

During April, the proportion of buy indications of interest (IOIs) remained above 60%, just below March’s level, which had been the highest since November 2021. It’s important to remember that IOIs often require significant time before trades can be completed, so two months with a 60%+ percentage of buy IOIs could signal an extended period of buyer interest.

While buy interest has remained elevated from prior levels, sellers are also seeing increasing activity. The number of distinct companies with at least one sell IOI on Forge Markets hit 222 in April. After posting a recent high in March, the number grew again and remains at the highest level since August 2023.

Looking ahead

Taken all together, the continued positive performance of the Forge Private Market Index, a building IPO pipeline, and stable core private market metrics suggest that the pre-IPO market may indeed be recovering. While the path ahead may not be linear, the environment appears far more supportive for the private market after two turbulent years.

1 Forge Data, as of 4/30/24

2 Reuters, 4/18/24

3 Forge Data, as of 4/30/24

4 Denver Post, 4/18/24

5 Yahoo! Finance, 5/15/24

6 CNBC, 4/26/24

7 Yahoo! Finance, 5/15/24

8 Forge Tech IPO Calendar, as of 5/15/24

9 EY, 4/15/24

10 Forge Data, as of 4/30/24. Performance of the Forge Private Market Index prior to the index launch in May 2023 is calculated using hypothetical performance based on historical Forge data.

11 Invesco, as of 4/30/24

12 Yahoo! Finance, as of 4/30/24

13 Renaissance Capital, as of 4/30/24

Please Read These Important Legal Notices & Disclosures

If you are a resident or a company registered within Germany this content is for marketing purposes only and on behalf of Forge Europe GmbH of Unter den Linden 38, 10117 Berlin, Germany (registered in the District Court Berlin (Charlottenburg) HRB 240763). Forge Europe GmbH is a tied agent in accordance with §3 (2) WpIG and provides investment brokerage, pursuant to §2 (2) Nr. 3 WpIG, exclusively in the name, on the account and under the liability of Effecta GmbH, Florstadt.

If you are resident or a company registered within the United Kingdom or Gibraltar this content is for general marketing purposes only and not a financial promotion on behalf of Forge Europe UK Limited of 10 York Road, London, SE1 7ND, England (registered in England and Wales with company number 14877431). Forge Europe UK Ltd is an Appointed Representative of Sapeno Partners LLP which is authorised and regulated by the Financial Conduct Authority.

Forge Europe GmbH and, its wholly owned subsidiary, Forge Europe UK Limited (together “Forge Europe”) accept liability to a client as set out in the individual agreement entered into with the client. All other liability to any client is expressly excluded to the fullest extent permitted by applicable laws and regulations. Each Forge Europe company expressly excludes all liability to the fullest extent permitted by applicable laws and regulations to any person who is not a client. You will only be a client if you have entered into a written client agreement with the relevant Forge Europe company.

Nothing contained herein is an invitation or inducement to engage in investment activity. This is not a recommendation, offer, solicitation of an offer, or advice to buy or sell securities by Forge Europe or any of its affiliates, nor an offer of brokerage services in any jurisdiction where Forge Europe is not permitted to offer brokerage services. Forge Europe does not (1) advise any party on the merits of a particular transaction; (2) assist in the determination of fair value of any security; or (3) provide legal, tax, or transactional advisory services. Please be aware that fluctuations in currency exchange rates may affect the value of sums denominated in USD.

The performance shown represents past performance, and past performance is not indicative of future results. Investing in private company securities is not suitable for all investors, is highly speculative, involves a high degree of risk, and you should be prepared to withstand a total loss of your investment. Private company securities are 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.

The Forge Private Market Index is calculated and disseminated by Forge Data LLC ("Forge Data") and is a mark of Forge Data. All rights reserved. The Forge Private Market Index is solely for informational purposes and is based upon information from sources believed to be reliable. It is not possible to invest in the Forge Private Market Index, and Forge Data makes no assurance that any investment products based on or underlying the Forge Private Market Index will accurately track index performance or provide positive investment performance. Forge Data is not an investment adviser and makes no representation regarding the advisability of investing in any asset classes or investment vehicles. Private company securities are highly illiquid, and the Forge Private Market Index may rely on a very limited number of trade and/or IOI inputs in its calculation. The performance of the Forge Private Market Index with respect to the growth of $10,000 shown herein does not represent the performance of any actual investment, but rather reflects the hypothetical growth of a $10,000 investment in a basket of securities based on the index. Additionally, the chart assumes reinvestment of dividends and capital gains in the constituent securities but does not reflect any fees or commissions that may be incurred in purchasing or selling such securities, which would lower the figures shown if included. Further, $10,000 may not be a sufficient amount to invest simultaneously in all securities contributing to the performance shown, which would further prevent an investor from matching the performance shown. By downloading this content, you acknowledge that you have reviewed and are subject to the Forge Private Market Index disclaimers and disclosures which contains other important disclaimers, disclosures and restrictions related to the Forge Private Market Index. Additionally, if you are accessing this content away from forgeglobal.com, you acknowledge that you have reviewed and are subject to Forge’s Terms of Use with respect to use and distribution of information as if you were accessing this content on forgeglobal.com.

This material may be distributed to, or directed at, only the following persons: (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FP Order”), (ii) high-net-worth entities falling within Article 49(2) of the FP Order, and (iii) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “FPO Relevant Persons”). Persons who are not FPO Relevant Persons must not act on or rely on this material or any of its contents. Any investment or investment activity to which this material relates is available only to FPO Relevant Persons. The information contained herein is based on currently available information, and Forge Europe undertakes no obligation to update any of such information or to reflect new information or the occurrence of unanticipated events, except as required by law. While Forge Europe believes such information forms a reasonable basis for the contents of this Investment Outlook, such information may be limited or incomplete, and this content should not be read to indicate that Forge Europe has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. This Investment Outlook contains trademarks, service marks, trade names and copyrights of Forge Europe or its affiliates and may contain those of other companies, which are the property of their respective owners. The use or display of third parties’ trademarks, service marks, trade names or products is not intended to, and does not imply, a relationship with Forge Europe or its affiliates or any of its respective affiliates, or an endorsement or sponsorship by or of Forge Europe or its affiliates.

This content is for the sole use of the intended recipient(s). Any unauthorized review, use, disclosure or distribution is prohibited.