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 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.
About the Author
Craig Derbenwick led the development and execution of cross-channel marketing and thought leadership content at Forge. Before his tenure at Forge, he spent 15 years in financial marketing roles and as a consultant for asset management and fintech companies. Read more from Craig.