Private Market Update May 2025
Steady as she goes: The private market stays the course, while the public market recovers
If you charted new waters on spring break last month, you may have missed the full story. Despite a somber outlook in early-April, the public market recovered from tariff induced shock and, at the same time, the private market remained stable and seemingly insulated from broader market volatility.
In fact, just like an ocean liner facing an iceberg, the public market reacted swiftly to tariff announcements, hoping to steer clear of calamity. The public market certainly had good cause for concern. From April 2nd to the public market low on April 8th, the QQQ lost 12.6% in value and the SPY was down 12.1%. Such swings and swells appeared large enough to make some investors seasick.
Since then, President Trump’s tariff stance appears to have softened, and he has shown some willingness to negotiate with various countries1. This factor, combined with strong earnings announcements from prominent tech companies such as Alphabet2, Microsoft3, Netflix4 and Meta5, not only helped the public market recover, but gave additional hope to the private market.
Yet, the private market may eventually feel the impact of tariffs, too, while its severity will likely vary by industry. Companies with offshore manufacturing or reliance on foreign-made components may feel the greatest impact, while software and other technology companies, with little in the way of physical goods, could experience less hardship. That said, if the economy weakens more, technology spending could be cut disproportionately relative to other categories.
As summer draws closer, China’s posturing appears to be one of the most consequential factors for the private market—both in terms of U.S. reliance on its manufactured goods as well as the sheer size of the tariff rates being proposed and those taking effect.6 The U.S. and China each took hardline stances towards each other throughout much of April but appeared to be open to negotiations as the month drew to a close.7
From choppy waters to smoother sailing
Private market indices were less volatile throughout the month of April, while the public market rebounded to recover much of its losses last month.
During April 2025, the Forge Private Market Index (FPMI) returned -1.86%, while the Forge Accuidity Private Market Index (FAPMI) returned 1.93%. The public market also had mixed results with the tech-heavy QQQ returning 1.40%, but the SPY returned -0.87%.
What’s notable is that QQQ recovered all of its losses from the public market selloff following the April 2nd tariff announcements. The SPY also bounced back from the majority of its losses in April but was not able to get back above a breakeven point. What comes next is anyone’s guess, but for now, it appears that the private market weathered April’s storm rather well.
| L1M | L3M | YTD | L12M | |
|---|---|---|---|---|
| FPMI | -1.86% | 23.90% | 34.53% | 36.48% |
| FAPMI | 1.93% | 5.58% | 11.62% | 23.24% |
| SPY | -0.87% | -7.86% | -5.38% | 11.87% |
| QQQ | 1.40% | -8.96% | -6.99% | 12.84% |
Forge Data through 4/30/25
All quiet on the exit front
Whereas March was a month with multiple potential IPOs (Klarna8, StubHub9 and Chime10), several significant M&A announcements (Weights & Biases11, Moveworks12 and Wiz13) and even one IPO pricing with CoreWeave14, April was decidedly quieter. One brave soul, design software company Figma, swam against the tide and confidentially filed an S-1.15 This filing occurred despite several companies pausing their IPO processes post-April 2nd.16
Things were even quieter on the M&A front. The beginning of 2025 seemed to usher in a brisker private company M&A environment, which had been sluggish for larger, unicorn acquisitions. Previously, regulatory concerns with a hawkish Federal Trade Commission had slowed major tech acquisitions17, but with the advent of a new presidential administration, it was projected that regulations would loosen and help spur the M&A market. This did not prove true last month, and no major technology acquisitions were announced. Of course, one month does not make a year, but without further momentum soon, the M&A market may need a life raft.
AI: The ongoing bulwark of the private market
Far from dead in the water, artificial intelligence (AI) companies continued to perform well despite April's choppy market conditions. Though not quite the record-setting pace of March18, companies like xAI (reportedly raising $20 billion at a more than $120 billion valuation)19, Runway (raised $308 million at a $3 billion valuation)20 and Nuro (raised $106 million at a $6 billion valuation)21 either closed or were reported to be raising major funding rounds.
Despite the headwinds, the Forge private AI basket performed admirably during April.22 This basket returned 9.88% during the month and looked particularly strong versus public market indices despite the eventual recovery of QQQ. Foundational large language model (LLM) company xAI led the gainers for the month of April with an 85% increase. The company acquired Elon Musk’s other holding, social media company X, and then went on to note that the combined entity was valued at $80 billion.23 This transaction was quickly followed by reports that xAI was seeking to raise an additional $20 billion at a more than $120 billion valuation.24 If this feat is accomplished, it would yield an astounding appreciation in valuation for a company that was launched less than two years ago in July 2023.25 The appetite for AI investments has not dwindled and this momentum continues to defy AI naysayers for the time being.
| L1M | L3M | YTD | L12M | |
|---|---|---|---|---|
| Forge private AI basket | 9.88% | 38.50% | 48.66% | 156.51% |
| SPY | -0.87% | -7.86% | -5.38% | 11.87% |
| QQQ | 1.40% | -8.96% | -6.99% | 12.84% |
Forge Data through 4/30/25
Buy-side indications of interest (IOIs) softened slightly
As illustrated by the chart below, some areas of the private market are showing signs of a slowdown. Buy-side indication of interest (IOI) demand continues to trend lower from its December 2024 high but remains well above levels seen during the Great Reset.26 As of the end of April, the buy and sell IOI data was roughly split
The number of unique issuers fell for second straight month
April 2025 unique issuers with sell IOIs fell again but decreased at a less pronounced rate compared to March 2025. The data has remained in a similar range since Q1 2022.
Median spreads narrowed further in April 2025
Median spreads fell to 6.4%, the lowest level since September 2024. The average median spread from January 2020 until the end of April 2025 has been 10.9%. Narrow spreads generally signal conditions are favorable to matching buyers and sellers.
Trade premiums shifted lower but remained within a healthy range
All percentiles decreased in April 2025 after each had increased in March 2025. Trade premiums, however, remained well above the lows seen during the Great Reset. The 90th percentile continued to whipsaw around 50% as it has since Q4 2023, while the remaining percentiles were within striking distance of recent highs.
As the summer months draw closer, the private market has held steady amid shifting macroeconomic tides. While the public market experienced a dramatic correction and rebound in April, the private market largely maintained its course—with AI continuing to be a standout sector. Though IPO and M&A activity slowed, and buy-side appetite softened slightly, key indicators like narrowed spreads and resilient valuations suggest that investor interest remains intact. If May brings further geopolitical clarity and continued momentum in sectors like AI, the private market may be poised to chart a confident path through the remainder of Q2.
About the Author
Shane Larkin is a private market investment leader with extensive experience in private and public markets, combining a strong analytical foundation with a background in engineering and business. He has conducted in-depth due diligence across a range of sectors, leveraging his expertise in financial modeling, data analysis and market research. Shane holds an MBA from Cornell Johnson Graduate School of Management. Read more from Shane.
