Institutional view of private market investing

Howe Ng, Head of Data & Analytics at Forge discusses how some institutions are looking at VC-backed and pre-IPO company investments in the current market.


Charlie GrimesManaging Director, Head of Forge Global Capital Markets

Howe let's start with you. I think it's fair to say the mood amongst investors on our platform seems to be cautiously optimistic. 

Inflation numbers are showing signs of improvement, but things still remain elevated. On the other hand, economic data remains strong, so we aren't seeing signs of a recession out there. Now you've spent 18 years on the buy side with most of that time at BlackRock. And since joining Forge, you've connected with dozens of buy side investors, hedge funds, VCs, portfolio managers, traders, what are you hearing from them regarding their current view of the private market?

Howe NgHead of Data & Analytics, Forge

Thanks, Charlie. And thank you for the question.

It is a timely question, particularly in the current environment. So, to answer your question directly, it really depends on the investors, though the overarching theme is that investors on our platform are increasingly data driven in their decision making process. Of the firms that I've spoken with, investors that are nimbler and have more discretion in their investment policies, they are curious about the potential opportunities in this asset class, and are looking to formulate new strategies.

I get the sense that they want to do this quickly and effectively, given potential buying opportunities. Now, some of the larger institutions that I've spoken with, particularly those already invested in the asset class, are looking for new ways to enhance their investment process - from researching new alpha signals to better ways to mark to market their private exposure. So, as we know, IPO or exit events are few and far between nowadays. The interesting trend that I see is that as companies stay private longer and trading activities of private secondaries increase, the liquidity profile and potential investment opportunities improve substantially.

And this is good news for investors who are looking for new sources of potential return and diversification. And when I speak to asset allocators, they talk about the challenges of a traditional 60/40 portfolio, how it is getting more difficult to generate excess return given the increased correlation among traditional asset classes, as well as how fast information and data get arbitraged away in today's environment, particularly in the public markets.

Even for investors currently with an alt allocation, many are just starting to find out more about this unique asset class. While many may have heard of household names such as Airbnb and Palantir and their successful public exits, surprisingly, few have realized that they could actually access those names in the secondary markets prior to exit events. Which leads us to Forge Data. With access to trading and data, investors can now rethink their investment strategies and change or fine tune their asset allocation models.

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