Forge Global Holdings, Inc. and its affiliates (referred to collectively as “Forge” throughout these FAQs) constitute a financial services company specializing in the private growth equity asset class. Through our different subsidiaries and business units, we provide a variety of services and products, such as offering private company stock trading via Forge Markets and private market data via Forge Data.
Forge Markets, known formally as Forge Securities LLC, is an SEC-registered broker-dealer (member of FINRA/SIPC).
Forge aims to provide a streamlined and secure way for investors to access private securities and to understand the private securities market by leveraging related data and for private companies and their shareholders to generate liquidity. Through Forge Markets, which facilitates private securities trading, and Forge Data, a comprehensive data solution for private market investing, Forge aims to increase transparency and efficiency in the private market.
To start working with Forge, you can create a free account that allows you to explore private market companies on our platform. You will be connected with a Forge Private Market Specialist who can assist you whether you’re trying to buy, sell, or learn more about the private market.
Forge Global Holdings, Inc. (NYSE: FRGE), which is a publicly traded company, is not a broker-dealer. Forge Markets (Forge Securities LLC), our wholly owned subsidiary, is an SEC-registered broker-dealer and a member of FINRA/SIPC.
Forge Data LLC (referred to as “Forge Data” throughout these FAQs) is a Forge subsidiary that offers a comprehensive data solution called Forge Intelligence, Forge Intelligence is a leading source of same-day pricing information for private company investors, with features including:
Forge works with all types of institutions, such as hedge funds, private equity funds, venture capital funds, mutual funds, RIAs, family offices, and more.
Private market investing with Forge Markets works by pairing your institution with a Forge Private Market Specialist who will walk you through every step from understanding your goals and potential target investments, sourcing a counterparty, navigating the right of first refusal process and company relations, all the way through closing.
To get started, you can create a free account and connect with a Private Market Specialist.
Forge Markets differs from other private market brokers based on our scale and experience within the private growth equity asset class.
Forge Markets is a broker-dealer, and our ultimate parent organization, Forge Global Holdings, Inc. (NYSE: FRGE), is a publicly traded company. And business units such as Forge Data provide our clients and investment professionals with proprietary insights, transaction data, and same-day market pricing.
As of December 31, 2022, we have facilitated more than 23,000 transactions in more than 500 private growth companies with over 550,000 individual investors and 16,000 institutional investors on our platform1. Our clients can rely on Forge throughout the life cycles of their investments, as we have experience coordinating with issuers and facilitating liquidity from both buyers and sellers, as well as providing data and insights for investors.
Forge Markets supports multiple structures for private market investments, with compensation arrangements varying accordingly. Typically, the fee is 5%. For transactions below our standard minimum of $100,000, additional fees may apply.
Forge does not have audited financial information from each company available. That being said, a handful of our institutional offers do feature access to high-level diligence information provided by the seller or an associated party under NDA. Additionally, Forge has a data team that compiles very robust company profiles for most issuers, complete with a company waterfall, funding history, investors, and exit scenarios.
The vast majority of our deals are direct secondary transactions, where the purchaser is directly on the capital table of the company at the close of the transaction. A stock certificate / associated proof of holdings is issued by the company in the purchaser’s name. These transactions may be more complex when navigating a company’s right of first refusal and board approval process, and as a result, typically take longer to consummate.
We will also engage in fund transfers, which enable a limited partner/beneficial owner in a single-asset fund to transfer ownership interest of that fund to the purchaser. These transactions are more streamlined as the company’s involvement is limited/non-existent, and there is no right of first refusal process.
If you own private company shares, you’re typically eligible to sell them, though some restrictions may apply. Unlike when buying private company shares, you do not need to be an accredited investor to sell.
However, a private company might have rules in place, like a “right of first refusal.” In that case, the company could step in as the buyer of your shares, rather than letting you sell them on the open market. Or co-sale rights may apply, such that others have the right to sell shares alongside you in a given transaction, which could prevent you from selling the full amount of shares you originally wanted to sell. Rights may apply, such that others have the right to sell shares alongside you in a given transaction, which could prevent you from selling the full amount of shares you originally wanted to sell.
For a deeper dive, see our blog “Can you sell shares in a private company before an IPO?”
Equity (that is, stock options or shares of stock) is often part of an employee’s compensation package, so startups and other private companies may be understanding of employees who seek liquidity for that equity for personal needs, portfolio diversification, etc.
To find out if you can sell your shares, you might read over company documents such as your employee stock option plan, which could specify rules and restrictions around selling your shares.
Still, there can be nuances, so you might speak with your HR department or other leadership to confirm if and when you can sell your shares. A Forge Private Market Specialist can also help you navigate your interactions with your company and guide you through your company's preferred transaction process.
Unlike public markets that have real-time price transparency and more regulation-driven company disclosures, private market valuations tend to be more infrequent and subjective.
That said, you can find valuation clues in information such as recent trading activity of your company’s private shares on a secondary marketplace like Forge Markets and valuations from recent funding rounds, and by comparing your company to competitors with publicly available valuations.
A Forge Private Market Specialist can share their insights with you to help you determine the value of your private company shares. Forge Markets has completed over 23,000 private market transactions in more than 500 private companies and has a proprietary platform of trading and valuation data that is used to help price your shares.4
The average transaction takes around 50 days from the time Forge Markets matches a buyer and a seller until the transaction is closed.3 Forge Markets keeps you informed of the timelines and steps you need to take along the way. If you’re thinking about selling your shares, see our blog – “Four things to consider before selling private stock.”
3 Note that each transaction is unique therefore could take longer than 50 days to close.
Working with a broker like Forge Markets, you can expect to pay a 5% fee. Fee might be higher for transactions below our typical minimum of $100,000. Your Forge Private Market Specialist can discuss transaction sizes and fees in more detail with you.
It can be difficult to come up with the funds needed to exercise your vested, private company stock options, and Forge believes that stock option holders should have the ability to acquire and sell the equity they have earned.
Forge Lending LLC, a Forge subsidiary, offers employees an Options Exercise Bridge Loan that can provide you with the funds needed to exercise stock options and sell the resulting stock without incurring a significant upfront cash expense. Learn more here. Other providers unaffiliated with Forge may also offer stock option exercise loan solutions.
Stock options give you the right to purchase shares at a given price, whereas shares equal outright ownership stakes in a company. If you want to sell private company stock, you need to first exercise your stock options so that you have shares to sell.
For example, you might have employee stock options to buy 100 shares at $50 per share after a four-year vesting period. If you exercise the stock options after those four years, you would pay $5,000 to own those 100 shares, regardless of the market price at that time.
Take a look at our blog post on stock options for more detail.
If you leave your company, the fate of your shares or stock options depends on several factors, starting with your vesting schedule.
Generally, if you have unvested shares or stock options, you would lose those when leaving your company. However, if you have vested stock options, you typically have a certain number of days after leaving (often 90, but this varies from company to company) to exercise your stock options.
If you own vested private company shares, or if you exercise your vested stock options after leaving the company, then you are generally able to hold onto those shares for as long as you’d like, much like how a private market investor can own shares of a startup without working there.
Still, there can be nuances to consider, so you should speak with a financial advisor and tax advisor to better understand your specific situation. Our blog post on what to do with your employee equity after leaving your company also has more information.
Private market investors include many parties, such as individual investors, venture capital funds, mutual funds, and more. To participate as a buyer in the U.S., the investor must be deemed an “accredited investor”, as defined by federal securities laws.
Qualifying as an accredited investor depends on meeting certain financial or professional thresholds, such as having income over $200,000 ($300,000 with spouse or partner) for the past two years, with a reasonable expectation to have the same in the current year.
Or, an individual can qualify as an accredited investor if they (alone or with a spouse/partner) have a net worth of at least $1 million, not counting their primary residence.
There are additional ways to qualify as an accredited investor. The above are just a couple of common examples.
Pre-IPO investing refers to investing in a company before it goes public and sells its shares on a public stock exchange. Pre-IPO investing can be an attractive opportunity for investors who believe that a company is poised for growth and has the potential to generate significant returns. However, it can be a high-risk investment, as there is typically less information available about the company's financial performance and future prospects than there would be for a publicly traded company.
Investors who participate in pre-IPO investing often do so through private placements or secondary market platforms like Forge Markets that allow them to purchase shares in the company before it goes public. For more on pre-IPO investing, please refer to our blog – “What is Pre-IPO Investing?”
Investors may buy pre-IPO shares for several reasons, such as:
Rather than investing solely in publicly traded companies, which often means investing in mature companies and facing a lot of competition from other investors, buying pre-IPO shares can potentially mean getting an ownership stake in a company before there’s a crowd.
See our blog post on buying pre-IPO stocks for more information.
While there is no legal requirement to use a broker to invest in private companies, many investors, especially individuals, may find that it’s easier to buy private company shares through a private marketplace like Forge Markets.
Doing so provides advantages, such as offering a centralized network of shareholder/sellers, compared with trying to source a seller with shares in your desired company on your own. Buyers can also benefit from Forge Markets’ experience with private company transfer processes, knowledge of applicable securities laws and transaction documents, and the ability to bring these elements together in a transaction.
On the other hand, one disadvantage of using a broker to buy private company shares is cost. Forge Markets, like most other brokers, charges a fee for their services. Working without a broker would save on these fees.
Working with a broker like Forge Markets, you can expect to pay a 5% fee. Fees might be higher for transactions below our typical minimum of $100,000. Your Forge Private Market Specialist can discuss transaction sizes and fees in more detail with you.
Valuing private company shares can be both an art and a science. Private companies generally don’t provide as much transparency to investors as public companies do, and you can’t see pricing from prior trades as easily as you can look at public company trade data.
That said, you can try to come up with a valuation based on information such as private market trading activity on a secondary marketplace like Forge, recent funding valuations, and valuation histories at comparable companies.
Forge has proprietary valuation insights, and your Forge Private Market Specialist can help you bring together all available information for your valuation assessments.
A private market investment may fit into building your investment portfolio by giving you exposure to a different asset class and different types of companies than you might otherwise allocate to. That can potentially help when it comes to areas like diversification and generating excess returns (of course, any investment can also lose some or all of its value, so you should consider the risks before investing in the private market).
For example, if you only had investments in public companies, your portfolio might be subject to the volatility that can come with publicly announced quarterly earnings seasons. That’s not to say that private market investments are immune from volatility (and they of course can lose some or all of their value regardless of them not being subject to public earnings announcement requirements), but your investment might be judged on a longer timescale.
To learn more about private market investing – see our blog “A Guide to Pre-IPO Investing.”
A direct investment involves buying shares directly from another shareholder or from the company itself. A fund investment is where an investor purchases fund units in an entity created to hold a specified set of assets such as the shares of a privately held company. In a fund investment, the investor does directly own or hold shares of the private company but owns fund units, which in turn give the investor indirect exposure to the shares of the privately held company.
Forge specializes in working with private growth companies. Private companies rely on Forge to help satisfy stakeholders such as employees and early investors by assisting them in managing their pre-IPO equity.
Forge works with private companies on a customized basis. We can craft our services to meet your unique needs, such as by helping to facilitate individual secondary market transactions (like when an employee wants to sell their equity) all the way through the management of large, formal liquidity programs.
We can help you manage the administrative and operational burdens of maintaining a clean cap table, setting the parameters for a liquidity offering, and more. To get started, please contact us here.
Forge differs from other private market brokers and platforms based on our depth and breadth of private market experience and offerings. For example, our trading platform powers proprietary private market insights that can help private companies better understand valuations.
As of December 31, 2022, we have facilitated more than 23,000 transactions in more than 500 private growth companies with over 550,000 individual investors and 16,000 institutional investors on our platform.5
