Private Market Update - February 2024

Strengthening IPO outlook trickles down to venture secondary market to start 2024

Key Takeaways
  • Equilibrium between the number of buyers and sellers holds for a second month, although spreads widened to start the year

  • Slight uptick in VC deals could signal private market growth in 2024

  • Increasing number of companies available for investment on Forge platform reflects growing issuer mix


For the last two years, the venture secondary market has searched for its footing amidst economic uncertainty and persistently high interest rates. With 2024 underway and economic conditions tentatively improving, investors are asking the same question: is the waiting game over? Have valuations stabilized, and is it time to get back in?

To understand the private market, it helps to start with the public market. Many investors consider the IPO market to be a bellwether for the venture secondary market – and after two very quiet years, it is finally showing signs of life.

The most prominent technology name on the precipice is Reddit, whose potential $5 billion IPO is in line with its derived price on Forge of $4.8 billion. 1 Analysts are watching a number of large, late-stage private technology companies like Fanatics, Plaid, Rubrik, Shein, and Stripe for potential public debuts. 2 3

Outside of the technology sector, Amer Sports (the holding company for Arc’teryx, Salomon, and Wilson) went public at the start of February and Viking Cruises may be teeing up an IPO as well. 4 5

With this supporting context, in some ways, the private market looks healthier than it did a few months ago. However, conditions haven’t improved enough to fully declare smooth sailing ahead and there remains some data points like the bid/ask spread that show continued volatility. Still, the path looks potentially much steadier than it did previously.

What underscores this outlook? For one, the distribution of new buy and sell indications of interest (“IOIs”) on the Forge platform has been close to 50/50 for the past two months, whereas sellers had a much larger share for most of 2022 and 2023. 6 We believe this balance indicates a healthy market, where both buyers and sellers want to trade, as opposed to an unstable market in which a disproportionate number of sellers seek to exit their positions with little buy-side interest.

The Forge Private Market Index has also shown signs of life recently. While the index fell slightly by -0.9% in January, it did outpace the small-cap Russell 2000 ETF, which fell -3.9% and the IPO ETF, which fell -9.7% last month. 7

At the same time, the VC funding market shows some encouraging signs, although the bifurcation between top and bottom performers continues. Overall global venture capital deal value rose by nearly 4% in January 2024 year-over-year, despite an almost 24% decrease in the number of funding rounds, according to S&P Global Market Intelligence.8 “Venture transaction value has been rising since November 2023, suggesting momentum for larger funding rounds in 2024 after coming off a down year,” reports S&P Global.

At the recent Carmo Private Markets Secondaries Meeting in Santa Monica, investors of all stripes spoke optimistically about increasing deal flow and a more active repricing of primary valuations, while cautiously noting that some companies are exploring using debt instruments that kick the valuation can down the road.9

Overall, 2024 started with some positive momentum, and the private market could be primed for an improvement over last year. Of course, unexpected events like the Fed holding off on interest rate decreases or the uncertainty that can come from an upcoming presidential election could throw things off, but for now, the ship appears headed in a promising direction.

The Details

Top-tier private companies continue to outperform, but aggregate spread widens in reversal of trend

In January, the median trade premium/discount to the last primary funding round for private companies stood at -58%. 10 But private companies run the gamut across sectors and quality, and the median doesn’t tell the whole story. Companies at the 75th percentile traded near their last primary round valuation at a modest 15% discount, while those in the 90th percentile traded at a 55% premium to their last primary valuation – and broadly speaking, this trend of high-quality companies trading at premiums has been consistent in recent months. 11

On the other hand, January saw the bid/ask spread on Forge Markets increase to 20.7%. 12 This increase was driven in part by a changing issuer mix, with investors bidding and looking to sell shares in new companies in a fresh price discovery process. But Forge also saw some widening spreads in companies that had interest carrying over from previous months. As a reminder, the bid/ask metric is calculated for only companies with new bid and ask IOIs in each month, and given market dynamics, it can be volatile and should be viewed in broader context of previous periods and other metrics.

Number of companies available for purchase on Forge Markets rebounds

The number of companies with sell indications of interest IOIs on Forge Markets increased in January to 198. 13 This metric has remained relatively stable throughout the prior two years.

A watchful eye towards future Fed rate actions

At Forge, we regularly monitor core private market metrics in the context of the broader macroeconomic environment. A key unknown remains regarding how the Fed will change rates going forward — the Fed will need to make a decision about how to balance the conflicting signals of a higher-than-expected inflation number while the job market remains strong, with more than 350,000 jobs added in January. 14 Lower rates in general mean that borrowing costs are cheaper, which could in turn mean greater institutional leverage and investment. Whether this line of thinking holds, and whether this new investment lands in private market secondaries remain open questions that will be answered in 2024.

1 Bloomberg

2 Crunchbase

3 MarketWatch

4 Bloomberg

5 Bloomberg

6 Forge Data as of 2/1/2024

7 Forge Private Market Index, data as of January 31, 2024.

8 S&P Global Market Intelligence, February 8, 2024.

9 Carmo Companies

10 Forge Data, as of 2/1/2024

11 Forge Data, as of 2/1/2024

12 Forge Data, as of 2/1/2024

13 Forge Data, as of 2/1/2024

14 Reuters, February 13, 2024.

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

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