Kelly Rodriques discusses growing momentum in the IPO market on CNBC
Forge Global CEO Kelly Rodriques joined ‘The Exchange’ on CNBC to discuss growing momentum in the IPO market, secondary markets for investment into private companies, and late-stage private market valuations.
Transcript
And now it is time for today's Tech Check. New momentum for the IPO market recently, the renaissance IPO ETF, which tracks the performance of recent debuts in the public market. It's up 25% year to date despite the drought of listings over the past 18 months and as macro uncertainties persist private valuations, they are still being pressured. They typically lag though. My next guest knows a thing or two about that Forge Global is a secondary marketplace where insiders can buy and sell shares of private companies, including some of the most coveted names like SpaceX, Reddit, and Stripe joining me now and that is Kelly Rodriques CEO, Forge Global.
Kelly, it's great we both happen to be in New York at the same time. So, that's all worked out. I'm interested in particular in late-stage companies. The ones I just mentioned, as well as say Instacart, because that tells us something about the IPO market, right? And sort of their readiness to go, or investors readiness to receive these companies. So, what are you seeing at some of those late-stage names?
So, this moment we refer to as the Great Reset.
We just put data out that shows that the ten-year bull that ran through 2021 is now undergoing a pretty massive set of changes, both investors, behavior, and companies raising money and valuations.
Right. So, what do those valuations look like at the late-stage? I remember last year during this Great Reset, Instacart took its own valuation down internally a number of times. Has that been coming back?
Yes. So, overall, the market is off by 61%.
It's important to know, though, that half of the large private tech hasn't raised money in between a year and two years, so, a lot of the discount were based on pricing we saw in 2021. But in the last period, in the last quarter, we've seen some interesting changes. We've seen about a 3% decrease in pricing, which is a significant slowdown, and about 28% of the Forge Private Market Index, which is the 75 most liquid names are actually trading up in Q2.
Now, we haven't seen this in two years. So, there is a shift underway.
So, that's a signal that maybe it's coming bac?. That there's interest in these companies? Do you think that that will lead? I know we've seen some IPOs, not necessarily in the tech space, but do you think that tech IPOs are next to come back?
Well, we're watching it. The data suggests there's probably two other data points that I'd mentioned, but in terms of what we saw in Q two on the Index, definitely seeing movement there. We're also, seeing the bid/ask spread now has shrunk to 17%.
Now, in the private markets, that's still high. Normal, highly liquid periods are around 11% or 12%. But those are down at 17%, coming down from their highs of 26. We're also, seeing ROFRs at two year highs.
So, one of the most active investors at the peak in 2021 was Tiger Global. It was a crossover fund. There was a report recently that it opened up its full portfolio to individual bids in the private markets. Have you seen that?
What does that do to the private markets when such a big player comes onto the scene and looking to sell?
It's a really interesting trend, but it only tells half of the story. When you look at the large institutions that were there buying in 2021. And a lot of new entrants have come into the market in the last two or three years, hedge funds are now fully in the private market.
No longer tourists.
Right. So, what you're seeing now is if you invested at those valuations in 2021, if you're looking at those same companies in 2023, you kind of be crazy not to look at buying as well.
So, yes, there are large players that invested in 2021 selling, but they're also, buying in 2023.
Last question for you. Any AI startups looking to sell shares on the secondary market? Because it feels like this sort of bifurcation where some of the late-stage have seen their valuations come down, but some of the people I talk to in Silicon Valley complain of a bubble already in AI, in the AI space, for private companies.
Yeah, it's definitely seeing it's hot moment right now. And like in any other sector, there's lots of lots of names that come out at the beginning and they're usually two or three winners.
So, at this point, you know, everyone wants to buy AI, it's hard to buy.
Right, okay. Hard to buy even in the secondary markets. Kelly, thank you So, much for being with us. Appreciate it. See you back in San Francisco.
About the Author
Kelly Rodriques has been Forge’s Chief Executive Officer since July 2018. Prior to Forge, Mr. Rodriques served as Chief Executive Officer of PENSCO Trust Company from March 2010 to September 2016. Since September 2016, he has been the Managing General Partner of Operative Capital, an early-stage investor in FinTech companies.
All rights reserved. The Forge Private Market Index is calculated and disseminated by Forge Data LLC (“Forge Data”) and is a mark of Forge Data. The Forge Private Market Index is solely for informational purposes and is based upon information from sources believed to be reliable. It is not possible to invest in the Forge Private Market Index, and Forge Data makes no assurance that any investment products based on or underlying the Forge Private Market Index will accurately track index performance or provide positive investment returns. Forge Data is not an investment adviser and makes no representation regarding the advisability of investing in any asset classes or investment vehicles. Private company securities are highly illiquid, and the Forge Private Market Index may rely on a very limited number of trade and/or IOI inputs in its calculation. Brokerage products and services are offered by Forge Securities LLC, a registered broker-dealer and member FINRA/SIPC. Please see this page for other important disclaimers, disclosures and restrictions related to the Forge Private Market Index that you acknowledge by using this website and/or continuing to access this content and to which you are subject. Additionally, if you are accessing this content away from forgeglobal.com, you are subject to Forge’s Terms of Use with respect to use and distribution of information as if you were accessing this content on forgeglobal.com.
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES
The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc., Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.
To the extent information about or defining specific terms is provided herein, Forge makes no representations as to its accuracy and has no duty to update such information. Such information is based on Forge’s experience and the meanings and connotations of terms as Forge typically uses and interprets them. Others may construe such terms differently, and you should do your own research and consult with financial, legal and tax professionals regarding any such concepts included herein.
This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions. Forge Data LLC is an affiliate of Forge Global, Inc. and Forge Securities LLC.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.
FORWARD-LOOKING STATEMENTS
This article contains “forward-looking statements,” which generally are accompanied by words such as “believe,” “may,” ”could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “target,” “goal,” “expect,” “should,” “would,” “plan,” “predict,” “project,” “forecast,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict, indicate, or relate to future events, trends, or Forge’s future financial or operating performance, or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding Forge’s beliefs regarding the Forge Private Market Index. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, while considered reasonable by Forge and its management, are subject to risks and uncertainties that may cause actual results to differ materially from current expectations. You should carefully consider the risks and uncertainties described in Forge’s documents filed, or to be filed, with the SEC from time to time, including in its Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Annual Reports on Form 10-K. There may be additional risks that Forge presently does not know of or that it currently believes are immaterial that could also cause actual results to differ materially from those contained in the forward-looking statements. In addition, forward-looking statements reflect Forge’s expectations, plans or forecasts of future events and views as of the date of this article. Forge anticipates that subsequent events and developments will cause its assessments to change. However, while Forge may elect to update these forward-looking statements at some point in the future, Forge specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Forge’s assessments as of any date subsequent to the date of this article. Accordingly, undue reliance should not be placed upon the forward-looking statements.
All rights reserved. The Forge Private Market Index is calculated and disseminated by Forge Data LLC (“Forge Data”) and is a mark of Forge Data. The Forge Private Market Index is solely for informational purposes and is based upon information from sources believed to be reliable. It is not possible to invest in the Forge Private Market Index, and Forge Data makes no assurance that any investment products based on or underlying the Forge Private Market Index will accurately track index performance or provide positive investment returns. Forge Data is not an investment adviser and makes no representation regarding the advisability of investing in any asset classes or investment vehicles. Private company securities are highly illiquid, and the Forge Private Market Index may rely on a very limited number of trade and/or IOI inputs in its calculation. Brokerage products and services are offered by Forge Securities LLC, a registered broker-dealer and member FINRA/SIPC. Please see this page for other important disclaimers, disclosures and restrictions related to the Forge Private Market Index that you acknowledge by using this website and/or continuing to access this content and to which you are subject. Additionally, if you are accessing this content away from forgeglobal.com, you are subject to Forge’s Terms of Use with respect to use and distribution of information as if you were accessing this content on forgeglobal.com.
PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES
The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc., Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.
To the extent information about or defining specific terms is provided herein, Forge makes no representations as to its accuracy and has no duty to update such information. Such information is based on Forge’s experience and the meanings and connotations of terms as Forge typically uses and interprets them. Others may construe such terms differently, and you should do your own research and consult with financial, legal and tax professionals regarding any such concepts included herein.
This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.
Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions. Forge Data LLC is an affiliate of Forge Global, Inc. and Forge Securities LLC.
Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.
FORWARD-LOOKING STATEMENTS
This article contains “forward-looking statements,” which generally are accompanied by words such as “believe,” “may,” ”could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “target,” “goal,” “expect,” “should,” “would,” “plan,” “predict,” “project,” “forecast,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict, indicate, or relate to future events, trends, or Forge’s future financial or operating performance, or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding Forge’s beliefs regarding the Forge Private Market Index. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, while considered reasonable by Forge and its management, are subject to risks and uncertainties that may cause actual results to differ materially from current expectations. You should carefully consider the risks and uncertainties described in Forge’s documents filed, or to be filed, with the SEC from time to time, including in its Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Annual Reports on Form 10-K. There may be additional risks that Forge presently does not know of or that it currently believes are immaterial that could also cause actual results to differ materially from those contained in the forward-looking statements. In addition, forward-looking statements reflect Forge’s expectations, plans or forecasts of future events and views as of the date of this article. Forge anticipates that subsequent events and developments will cause its assessments to change. However, while Forge may elect to update these forward-looking statements at some point in the future, Forge specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Forge’s assessments as of any date subsequent to the date of this article. Accordingly, undue reliance should not be placed upon the forward-looking statements.