Forge Investment Outlook Q4 2024

Investors Look Beyond the Great Reset to AI’s Surge 

Two years into the Great Reset, investors have seemingly cut their losses and set their sights on the next big thing: AI and a handful of outperformers who have transcended the market’s multi-year downturn.

By Andrew Alden, CFA, Lindsay Riddell, Riley Martin, and Louis Metzger

October 24, 2024

Forge Investment Outlook Private Market Data & Analytics

Key Takeaways

Cap-Weighted Outpaces Equal-Weighted Private Market Index - The cap-weighted and equal-weighted indices continued to meaningfully diverge in Q3, as the cap-weighted Forge Accuidity Index outperformed the equal-weighted FPMI 9.4% vs. 2.4% YTD. The delta can be attributed to heavier weighting of top performers like Anduril (+56% YTD) in the Forge Accuidity Index as well as other factors.
Top Issuers Trading at Premiums  - Of the 25 most-traded issuers on the Forge platform, 20 posted positive Forge Price returns in 2024. Those issuers span sectors and subsectors, from computing hardware companies like Cerebras (+199% YTD), to AI (which Forge classifies as Data Intelligence) companies such as Lambda (+786% YTD) to blockchain companies such as Kraken (+60% YTD) to human resources companies like Rippling (+65% YTD). Those are among 12 of the top 25 companies showing gains exceeding 20% YTD.
Last Raise 2021 - Even as the Great Reset period has seen many companies reducing valuations over the past two years, 54% of active companies on the Forge Platform – identified as companies with a Forge Price - last raised a primary round in 2021 or prior. Of the down rounds recorded in Q3, a bulk of those (19) are attributable to companies that had last previously raised in 2021.

INSIDE THE REPORT

Market Performance 7
Primary Market Activity 14
Secondary Market Activity 20
Mutual Fund Marks 27
Exit Activity 30

Cap-Weighted and Equal-Weighted Index Performance Continue to Diverge in Q3

Starting in mid-Q2, the modified cap-weighted Forge Accuidity Index began to diverge from the equal-weighted FPMI. This shift was driven by: 1) larger allocations to top performers like Anduril, Ramp, Chime, and Cerebras in the Forge Accuidity Index; and 2) the exclusion of smaller names from the Forge Accuidity Index that weigh down FPMI's performance, with Exabeam’s -100% loss accounting for the largest drag.

Even Split of Companies Marked Up and Down in the Forge Private Market Index

In Q3, 36% of companies in FPMI saw their Forge Price increase, while 41% experienced a decrease. Following a Q2 high, where 43% of companies reported price increases, the trend is shifting toward a more balanced split between positive and negative performance. The average markdown was -16.1%, compared to a +9.8% markup which contributed to the slightly negative overall performance of the FPMI in Q3.

Down Round Persistence Bringing Reality to Valuations

Primary fundraising remained flat in Q3, with down rounds comprising 32% of all rounds—matching the highest proportion recorded on the Forge platform. Companies raised $11.9 billion across 116 primary rounds, with both metrics showing a slight decline quarter-over-quarter. While the fundraising environment remains chilly at best, particularly for non-AI companies, the persistence of down rounds indicates a gradual shift toward more realistic valuations in the private markets. 

Authors

Andrew Alden

Senior Director of Quantitative Research, Forge

Andrew Alden, CFA, serves as Senior Director of Quantitative Research at Forge Global, where he leads a research team focused on the private market. Prior to this role, Andrew launched Semantiqa, an investment management firm, which focused on the public-market growth equities space.

Lindsay Riddell

EVP, Corporate Marketing and Communications

Lindsay Riddell is EVP of Corporate Marketing & Communications at Forge Global. Prior to joining Forge, Lindsay ran the Corporate & Executive Communications at Hotwire Global, a technology PR firm. She was a technology and financial journalist for 18 years, including at the San Francisco Business Times.

Riley Martin

Senior Data Analyst, Forge

Riley Martin is Senior Data Analyst at Forge Global. Before joining Forge, Riley was a Consultant for Strategy and Analytics at Deloitte, assisting large tech clients with in-depth analysis of global data.

Louis Metzger

Senior Financial Analyst, Forge

Louis is a Senior Financial Analyst at Forge Global, focusing on valuations and private market trends. Before joining Forge, Louis worked in corporate finance at Initiative Media and was a startup founder.

Disclaimers

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.

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