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Private Market Continues Showing Signs Of Improvement As Capital Markets Activity Increases

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Key Takeaways

  • Bid/ask spread on Forge Markets falls to lowest level in 19 months
  • Forge Private Market Index gained 1.59% during the three month period ending August 31, 2023
  • IPO market is gearing up for what could be an active end to 2023


As the summer comes to an end, the U.S. economy and financial markets continue showing signs of improvement. And the first prominent VC-backed tech IPOs in months plus some notable primary fundraising may signal more thawing ahead.

At the end of August, two big tech names filed paperwork to go public—Klaviyo and Instacart. Although they are being commonly grouped together because of their IPO timing, they are very different companies with very different business models.

Klaviyo, which makes marketing automation software, has raised nearly $800 million in primary funding to date, and was traded frequently on the secondary market during its private lifespan. In contrast, Instacart, which would be the most prominent on-demand delivery platform to go public since the drawdown began, has raised $2.74 billion in primary funding to date, and was less active on the secondary market during its private lifespan. Both companies are also constituents of the Forge Private Market Index.

What they share is a combination of potential profitability, attractive total addressable market, and growth potential that investors find alluring in technology companies these days.

These IPOs could be key to opening up the capital markets more broadly and increasing liquidity, which could drive more M&A, IPOs, and overall business expansion. September also brought news that car-sharing startup Turo may look to go public by the end of the year. This slate of IPOs led Goldman Sachs CEO David Solomon to comment that “over the course of the next few months, especially if Arm and some of these other IPOs go well, I think you’re going to see a meaningful increase in activity.”

Outside of capital markets, the private market continues to show signs of a steady recovery. After a rough first half of the year, the Forge Private Market Index – a benchmark for actively traded private companies – turned positive over the last three months, with a 1.59% gain during the three month period ending August 31, 2023. 1

The number of issuers with sell-side indications of interest (IOIs) in August 2023 on Forge Markets hit a record high, and the spread between buyers and sellers compressed to the narrowest band in 19 months. 2

In the private primary fundraising markets, fintech company Ramp announced a new $300 million fundraising round. While the company’s $5.8 billion valuation represents a –28% discount from its previous high, Co-Founder and CEO Eric Glyman acknowledged that startups like Ramp are dealing with a new valuation environment compared to 2021 and need to adjust accordingly. It’s also a reminder that quality companies can still raise money in today’s environment if they right-size the sky-high valuations that were achieved in the last two years but may no longer apply.

These positive turns in the private market are supported by broader economic trends.

On the macro side, the U.S. economy has likely been growing faster than forecasted, with Bloomberg reporting that “the U.S. economy has been looking so solid lately that Federal Reserve officials will probably need to double their projection for growth in 2023 when they publish an updated outlook later this month.” 3

That growth has the Fed “increasingly optimistic they can quash inflation without causing serious economic pain,” potentially achieving the hallowed “soft landing” goal of monetary policy. The labor market also continued expanding, yet did so at a more measured pace in August, with a 187,000 increase in jobs and 4.3% annual wage growth. 4

Altogether, these developments look good for private companies and markets in general as we head into the home stretch of 2023. That’s not to say that all caution and pessimism have dissipated, but multiple data points and economic activity are trending positive.

The Details: Forge Private Market Index rising as top-tier companies trade at premiums

Over the three months ending August 31, 2023, the Forge Private Market Index is up 1.59%, lagging the major public market indices. The Forge Private Market Index reflects the up-to-date performance and pricing activity of venture-backed, late-stage companies that are actively traded in the private market through closed trade prices plus additional liquidity data.

The Forge Private Market Index is not the only broad reading that shows signs of improvement. The median discount that a company on Forge Markets traded to its last primary round improved to –53% in August. But most notably, companies in the 90th percentile traded at a 42% premium to their last primary funding round. Again, this may emphasize that investors are willing to pay up for quality companies when those opportunities become available.

There also seems to be increasing alignment between the price that buyers want to pay and the price at which sellers are willing to part with their shares (bid/ask spread). The median bid/ask spread of IOIs on Forge Markets fell to 12% in August, the lowest since January of 2022. The bid/ask spread peaked at 30% in April 2023 in the throes of the regional banking crisis.

Record number of companies available for purchase on Forge Markets

The number of unique companies with sell-side interest on Forge Markets increased to 228 in August, which is an all-time high. It’s a clear reminder of the liquidity potential in the private markets for both employees who seek to cash out their shares, and investors who may need to return capital to their LPs.

Potentially representing seasonal trends, the percentage of buy-side IOIs fell slightly to 37.7% in August. The summer months are generally known as a period when many financial professionals take vacations, so it will be worth monitoring this metric as investors return to their desks and the capital markets re-open more broadly.

1 Forge Private Market Index:

2 Forge Data as of 8/31/2023

3 Bloomberg, September 6, 2023.

4 Bureau of Labor Statistics September 1, 2023.

Article by Dan Chaparian, Forge Global

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.