Private Market Update - October 2023

Private market shows encouraging signs in Q3 despite September softening

Key Takeaways
  • The Forge Private Market Index finished the last three months up 1.1%, outpacing public equity markets for the first time in 2023

  • Private market data was weaker in September after showing positive signals in prior months

  • The IPO market could be starting to thaw, as two IPOs launched in September


After two months of improving data through Q3, the private market slowed down in September. Still, the Forge Private Market Index posted a positive gain for the third quarter, ending up 1.1%.1 In contrast, many public market equity indices — including the S&P 500 and the Nasdaq Composite index — posted negative performance for both the month and the quarter.

The S&P 500 fell –4.9% in September, while the Nasdaq Composite index dropped –5.8%. 2 3 While we can only speculate, these reversals may stem from macroeconomic concerns such as the specter of continued hawkish policy by the Fed in its efforts to tame inflation and geopolitical unrest.

Despite public markets declining, private market companies showed some resiliency. While the Forge Private Market Index is still down 16.1% year-to-date, the index was essentially flat in September and finished Q3 up 1.1%.4

That’s not to say that all is rosy in private markets. Companies are trading at a deeper 63% median discount compared to their last primary funding rounds.5 But one silver lining is that the bid-ask spread was 15% in September, just slightly above the median over the past few years.6 This may indicate relatively healthy liquidity and a continued ability for buyers and sellers to find common ground.

To that point, private company dealmaking has been heating up lately. The IPO market seemed like it was entering a deep freeze, with global IPO proceeds down 32% year-over-year.7 But there were renewed signs of life in September, as two companies completed IPOs late in the month. Klaviyo went public at a valuation of $9.2 billion8 — a premium to its last Forge Price — while Instacart went public at a valuation of $9.9 billion,9 nearly in line with its last Forge Price. 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.

Private market fundraising also picked up in September. Several startups showed that there are high-dollar fundraising rounds, even if the market as a whole remains tight.10 For example, autonomous trucking company Stack AV raised $1 billion in a Series A round backed by Softbank 11, while Databricks announced a $500 million Series I round at a slight valuation increase.12

While these anecdotes could provide some room for optimism, the private market still has its work cut out for it to catch up to public market growth this year. But if the IPO market continues to thaw and investors continue to invest, private companies could be positioned for a stronger fourth quarter, despite likely continued uncertainty around Fed policy and geopolitical unrest.

The Details

Forge Private Market Index up for the quarter

After declining for much of the year, the Forge Private Market Index posted a positive performance of 1.1% for the quarter. The index outperformed the public market, as measured by public equity ETFs QQQ, SPY, IPO, and IWM. The tech-heavy NASDAQ-100 ETF (QQQ) lost –2.7% for the quarter and the S&P 500 ETF (SPY) lost –2.9%.

Core Private Market metrics remain relatively stable

On Forge Markets, the bid/ask spread between buyers and sellers increased slightly to 15% in September, though Q3 overall saw the bid-ask spread on Forge Markets maintain the downward trend that began in Q2.

In September, private companies on Forge Markets traded at a –63% discount to their last primary funding round, deepening from a –50% discount in August. Companies in the 90th percentile dropped to a –20% discount in September from a 42% premium in August.

Through the end of Q2, companies on Forge Markets continued to exercise their Right of First Refusal (“ROFR”) at elevated levels compared to the lows of 2022. On the whole, this suggests that company insiders remain ready to buy stock at the deeper discounts that have been seen throughout the year. This data is published through Q2 because the Q3 ROFR window remains open. As a reminder, when a private company shareholder seeks to sell stock to a third-party buyer, the company typically retains a ROFR for a set period (often 30 days) to step in and buy the stock back itself (or assign this right to another investor) at the price negotiated by the seller and buyer.

Private companies raise money at small premiums

During Q3, the median private company on Forge Markets that raised primary funds did so at a median 1.2x step-up from Q2. For private companies that achieved the highest valuation growth, the post-money valuation step-ups were only 2.4x, the lowest level in a five-year lookback. These step-up levels suggest that the fundraising environment remains investor-friendly, particularly as investors demand – and receive – more preferential terms in their deals. Forge’s Q4 Investment Outlook offers a deep dive into the preferred liquidation multiples and other deal sweeteners that investors have been negotiating into deal terms.

Median mutual fund marks rose in Q2 (the latest quarter for which data is available), though this increase was due to a changing mix of covered companies rather than a true uptick in the valuation of mutual funds’ private company holdings. At the same time, discounts in the secondary market increased slightly in September, leading to a widening disparity between these two data points.

The percentage of buy-side indications of interest (“IOIs”) remained steady at 37.7% in September, matching August’s reading. The lack of movement in buy-side IOIs suggests that investors may be exercising caution, particularly as public markets declined during the month and macroeconomic uncertainty has risen.

The number of unique companies with sell-side interest on Forge Markets decreased in September after hitting an all-time high in August. Despite the small pullback, the total remains in a similar range as in prior months, signaling relative stability in the market.

The Forge Private Market Update is published monthly and provides key data points to help investors understand and navigate the private market. For readers interested in a deeper dive into private market dynamics, Forge recently published the Q4 Forge Investment Outlook, which offers in-depth data and analytics. Stay tuned for additional publications from Forge as we seek to bring greater transparency and insights into the private market.

1 Forge Private Market Index as of 10/13/2023

2 S&P Dow Jones Indices, 10/03/2023

3 Nasdaq, 10/04/2023

4 Forge Private Market Index, as of 10/05/2023

5 Forge Data as of 10/12/2023

6 Forge Data as of 10/12/2023

7 EY, 09/27/2023

8 Reuters, 09/19/2023

9 Reuters, 09/18/2023

10 AlleyWatch

11 CB Insights, 09/15/2023

12 Pitchbook, 10/13/23

About the Author

Dan Chaparian is VP of Product Marketing at Forge Global. Prior to joining Forge, Dan was VP, Global Product Marketing for BlackRock's iShares ETF business. He previously held positions at Apple and Uber and is a former startup founder. Read more from Dan.

About Forge

Forge Global Holdings, Inc. (together with its subsidiaries, “Forge”) is a leading provider of marketplace infrastructure, data services and technology solutions for private market participants. Forge Securities LLC (“Forge Securities”) is a registered broker dealer and a Member of FINRA that operates an alternative trading system. 

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