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

Private Market Update - April 2024

Turning a corner: Private market posts best month in years

By Craig Derbenwick
Private Market Updates

Key Takeaways

  • The Forge Private Market Index was up 5.2%, posting its strongest monthly performance since 2021

  • High-profile IPOs helped drive performance amid rising exit and M&A activity

  • The percentage of buy IOIs on Forge Markets surpassed 61%, suggesting increasing demand for private companies

Overview

After two challenging years, the private market appears to be accelerating. In March, the Forge Private Market Index experienced its best month since 2021, rising by 5.2%.1 The positive performance was driven in large part by the IPOs of AI infrastructure company Astera Labs and social media platform Reddit, two unicorns that both rose significantly on their first days as public companies in late March.2

At the end of their first trading days, Astera Labs had risen 72% 3 while Reddit had gained 48%,4 even though both companies have since declined from their highest levels.5,6 These IPOs translated to strong gains for each company from their last private market reading: Astera Labs was up 383% and Reddit was up 67%, compared with their Forge Price on December 31, 2023.7 Together, these two companies contributed more than half of the 5.2% performance for the Forge Private Market Index in March.8

Driven by the two IPOs and broader strength by other companies, the Forge Private Market Index outpaced the performance of many public equity ETFs in March. One notable exception was the Renaissance IPO ETF, which had a 5.8% return for March.9

Looking at the full quarter, the Forge Private Market Index lagged comparable ETFs, though several metrics hinted at a more positive environment emerging for pre-IPO companies. For a more in-depth view of the quarter, please see the Forge Investment Outlook, which includes key trends and metrics covering primary and secondary data.

In the first three months of the year, many core private market metrics showed momentum. March saw the highest proportion of buy Indications of Interest (IOIs) on Forge Markets — 61.4% — since August 2021.10 In addition, Forge also saw a 45% increase in the overall number of IOIs submitted to the platform in Q1 2024 compared to Q4 2023.11

That said, not every indicator was positive. Median trade premiums remain sharply negative, with companies trading at an average discount of -51% on Forge Markets compared to their last primary round valuations, similar to previous months.12 In addition, even the best-performing companies that need to raise capital are not experiencing significant valuation increases, and the median company is seeing essentially no valuation increase at all.13

But after two years of fighting headwinds, the private market may be poised to benefit from broader trends. The U.S. IPO market grew significantly in Q1 2024 with 49 public offerings, up from 33 in Q1 2023. Meanwhile, the size of these listings also increased substantially, with proceeds jumping by 230% since last year to reach $8.4 billion, according to EY.14

The IPO pipeline continues to grow as well, with unicorns like cybersecurity company Rubrik15 and fintech company Klarna16 expected to IPO in the coming months, along with a broader set of companies with the potential to go public this year.17

M&A activity has also been picking up, with deals totaling nearly $780 billion globally in Q1 2024, up 22% year over year, based on Dealogic data.18 Tech has also looked strong, with the sector having the highest M&A deal value of any industry in Q1 2024, according to Dealogic data reported by Law360.19

Overall, March showed promising signs for the private market. If that momentum continues into the second quarter, it seems reasonable that valuations may rebound, even though a recovery will likely vary across sectors and individual companies.

The Details

The Forge Private Market Index was up 5.2% in March

During March, the Forge Private Market Index posted positive performance of 5.2%, the strongest month since 2021.20 For the month, the Forge Private Market Index outpaced many comparable public equity ETFs, trailing only the Renaissance IPO ETF.

For Q1 2024 altogether, the Forge Private Market Index was up 4.5%, posting its best quarterly performance since 2021.21 Despite the positive quarter, the private market still trailed comparable public equity ETFs, as the first three months of 2024 saw a new all-time high for the Nasdaq and 22 new highs for the S&P 500.22

In March, 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 the Forge platform traded at a median discount of -51%, which is roughly consistent with the last four quarters. The top 10% companies traded at a +37% premium to their last primary round valuation, while the bottom 10% declined slightly to a -78% discount.

In March, the median bid/ask spread on Forge Markets fell to 9.5%, below the four-year median, suggesting that buyers and sellers are coming closer on pricing levels.

IOI data suggests increasing demand for private companies

During March, the percentage of buy IOIs exceeded 61%, the highest level since November 2021, and building on February’s total of nearly 55%. The increasing proportion of buyers could signal higher demand for private companies.

In addition to rising buy interest, the overall number of IOIs on Forge Markets grew as well, with a 45% increase from Q1 2024 compared with Q4 2023. Meanwhile, the number of distinct companies with at least one sell IOI on Forge Markets hit 208 in March, the highest level since August 2023.

Primary market data shows a more mixed picture

While secondary market metrics signaled a potential recovery, primary market data shows a more nuanced picture. In Q1 2024, companies on the Forge platform raised the most capital in nearly two years. However, as the below chart from the Q2 Forge Investment Outlook shows, more than half of the rounds in Q1 2024 were down or flat, suggesting that capital remains expensive for companies seeking an infusion of cash.23

Number of Funding Rounds and Money Raised for Mid- and Late-Stage Companies

Other data highlights the challenging fundraising environment. For example, in Q1 2024, the median company on the Forge platform raised capital at an effectively flat valuation compared to its previous funding round. Even the best-performing companies are not achieving substantial valuation increases when raising primary capital compared to previous years. These levels suggest that while some core metrics have begun to show glimpses of the bullish 2021 environment, pre-IPO companies likely still have a long road to recovery.

1 Forge Data, as of 3/31/24. 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.

2 Fortune, 3/22/24

3 Bloomberg, 3/20/24

4 Reuters, 3/21/24

5 Yahoo! Finance, 4/19/24

6 Yahoo! Finance, 4/19/24

7 Performance is based on the closing price per share on the first day of trading publicly relative to their pre-IPO Forge Price on 12/31/23. Forge Price is a derived price per share for private companies that incorporates a range of pricing signals like closed trades, bids, asks, and primary funding rounds.

8 Forge Data, as of 3/31/24

9 Renaissance Capital

10 Forge Data, as of 3/31/24

11 Forge Data, as of 3/31/24

12 Forge Data, as of 3/31/24

13 Forge Data, as of 3/31/24

14 EY, 4/4/24

15 Reuters, 4/15/24

16 Fortune, 3/8/24

17 Forge Tech IPO Calendar, as of 4/24/24

18 The Wall Street Journal and Dealogic, accessed 4/10/24

19 Law360, 4/9/24

20 Forge Data, as of 3/31/24. 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.

21 Forge Data, as of 3/31/24

22 CNN, 2/29/24

23 On the left y-axis, the bar chart counts the number of up, flat, or down rounds for Mid- and Late-stage companies in each quarter on the Forge platform since 2019. On the right y-axis, the line chart plots the total amount of money raised by Mid- and Late-stage companies in each quarter since 2019. Forge defines Mid- and Late-stage based on a set of rules incorporating funding rounds, money raised, implied valuation, and company age.

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.

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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.