Painful decisions are coming for business leaders due to a public market downturn and narrowing exit options for startups, but eventually the best businesses will emerge from the current market stronger. That seemed to be the consensus from a panel discussion hosted on Thursday by Forge Global, a private securities marketplace based in San Francisco.
Forge Global CEO Kelly Rodriques, who I recently interviewed for a Barron’s Live event, notes that most private transactions in pre-IPO shares still take place at prices above the last completed financing round—but the premium is shrinking.
Investors are getting more comprehensive and timely data on the valuations of private companies, thanks to the rise of marketplaces to trade shares. According to the latest report from Forge Global, the average price of companies trading on the platform dropped 8.9 percent between the last quarter of 2021 and the first quarter of 2022. Meanwhile, the price of newly-listed companies measured in the Renaissance IPO Index plunged 31.2 percent as the public markets sustained substantial price corrections in the past few months.
PODCAST: Barron's associate editor for technology Eric Savitz speaks with Kelly Rodriques, CEO of Forge Global, they will take a close look at the state of the market for venture capital investments.
Driving the news: Forge Global, which operates a private stock marketplace, reports a record amount of sell-side interest and a significant decline in trading valuations.
The market for public debuts has gone ice-cold in the month of March. But this week, Forge Global bucked the trend. The startup completed its blank-check merger on Tuesday, and its shares got off to a crackerjack start, rising as much as 143%. The stock settled down as the week progressed for a more modest 13% gain.
Forge welcomes interest from the media and is committed to bringing greater transparency to the private market. However, Forge facilitates offerings and transactions in unregistered securities for private companies and their shareholders. These transactions are subject to complex securities laws and regulations impacting public disclosure of related details. Additionally, Forge’s commitment to confidentiality for both issuers and clients prohibits disclosure of particular transactions. Accordingly, Forge’s policy is to not comment on, confirm or deny any pending or potential transaction.