Private Market Update - November 2023

Private market metrics show signs of optimism despite October public market slump

Key Takeaways
  • Both public and private market index performance was negative in October as macroeconomic events dominated the news

  • Bid-ask spreads tightened and median discounts for private companies decreased from September

  • Private company dealmaking continues to show cautiously optimistic signs, though expectations for a broader thaw may need to be tempered


After a challenging period, the private market gave positive signals this past summer. The IPO market, for one, started to show signs of life, with big names like Instacart and Klaviyo announcing plans to go public. In addition, the Forge Private Market Index (“FPMI”) posted positive performance in the month of September and outperformed public markets over the past three months.

To some extent, these positive trends continued into the fall. Instacart and Klaviyo followed through on their plans to go public in September, potentially signaling a thaw in the IPO markets after a deep freeze. Yet even those long-awaited IPOs ended up mixed, as both companies have since declined following their first-day performance.

This search for direction extended into the private market as well in September. For that month, private companies on Forge Markets traded at a deeper discount (-63%) compared to their last primary funding rounds, and the Forge Private Market Index turned negative for the month.1

So, as Q4 began in October, there was a lingering question: Would the private market continue the weakness seen in September, or would it return to a more favorable trajectory? That question remains unanswered, as October was another month of mixed signals. While we believe there are optimistic signs, caution remains as we head into the home stretch of 2023.

While it’s hard to pinpoint exact drivers, macro factors such as war in the Middle East and the prospect of continued tightening Fed interest policy may have contributed to negative performance in both public and private markets in October.

The Forge Private Market Index was down -2.7% in October,2 similar to the S&P 500 index’s -2.2% return.3 For the last three months ending in October, however, the Forge Private Market Index has outpaced the S&P 500, although both have been negative in absolute terms.

That said, public markets got a boost at the very end of the month and have been rising in early November, amidst the backdrop of the Fed holding rates steady and a jobs report showing slower growth.4 While private markets have not experienced the same boost yet, that could change in the coming months.

The IPO market continues to show signs of improving, such as with Singapore-based e-commerce retailer Shein gearing up to go public at a valuation of up to $90 billion, according to Bloomberg.5

In addition, data from Preqin, as reported by Pensions & Investments, shows that over half of private capital firms increased headcount between last year and this year, with most of the hiring happening on investment deal teams.6 This might signal that private capital firms could be ramping up for more deal activity as this period of tight monetary conditions potentially eases.

Furthermore, bid-ask spreads on Forge Markets improved to 12% in October after rising to 15% in September, which could indicate better liquidity and agreement on valuations. The median discount also dropped from -63% to -54% from September to October, and companies in the 90th percentile traded at an average premium of 11% in October compared to their last funding rounds, an increase from an average discount of -20% in September.7

The number of companies available to trade on Forge Markets bounced back in October, as the ratio between sellers and buyers also increased from September. While more sellers could aid dealmaking to some extent, limited demand from buyers could be a harbinger of lower valuations.8

Altogether, October proved to be a month that showed some resiliency in the face of macro headwinds, and a downward trendline from September does not seem to be forming. However, because the data remains mixed, it’s still too early to say that a private market recovery is well underway.

The Details

The Forge Private Market Index outpaces public markets over the past three months

The Forge Private Market Index was down -1.5% for the past three months, outperforming public markets, which all experienced sharp declines over this period. After posting negative performance in September, the FPMI again declined slightly in October. Still, the FPMI significantly trails public market performance for the YTD period.

Although the Forge Private Market Index posted negative returns in October, the month also brought a handful of more optimistic indicators. Most notably, after ticking up to 15% in September, the median bid/ask spread on Forge Markets showed resilience in the face of broader public market headwinds and improved to 12% in October. This key metric has now seen a 60% decrease since spreads peaked at 30% in April during the height of the banking crisis.

In another positive sign, trade premiums/discounts for companies traded on Forge Markets improved in October after weakening in September. Of note, the median discount improved to -54% in October from -63% in September, while companies at the 90th percentile posted a premium of 11% in the month after trading at a -20% discount last month.9 Overall, this data appears to be improving, but we’re hesitant to draw firm conclusions from a limited time period.

Number of companies available for purchase on Forge Markets bounces back

In another cautiously positive sign, the number of private companies with shares for sale on Forge Markets rose in October after declining in September. In tandem with tightening bid/ask spreads, this data point suggests potential stabilization of the private market and the potential for a more favorable climate ahead.

While some data suggests potential strengthening in the market, other data points demonstrate that buyers are remaining cautious. For instance, the number of sellers on Forge Markets continues to significantly outpace the number of buyers, with the ratio of sell-side to buy-side IOIs increasing in October from September. We will continue to monitor this ratio for signs that buyers may be getting more optimistic or to see if the trend of more sellers than buyers will continue in the months ahead.

1 Forge Data as of 10/12/2023

2 Forge Data as of 10/31/2023

3 S&P Dow Jones Indices, data as of 10/31/2023

4 U.S. Bureau of Labor Statistics, data as of 11/03/2023

5 Bloomberg, 11/06/2023

6 Pensions & Investments, 11/08/2023

7 Forge Data as of 10/31/2023

8 Forge Data as of 10/31/2023

9 Forge Data as of 10/31/2023

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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