When privates go public: The Forge IPO
Making private markets more accessible, liquid, and transparent for all
Yesterday, we celebrated the Forge (NYSE: FRGE) team as they announced their IPO on NYSE.
It’s a fitting milestone for a company whose goal is to make private markets more accessible, liquid, and transparent for all.
It’s not lost on us that the act of Forge going public to create the first publicly traded private securities marketplace is an irony that needed to occur. Forge in the public markets now enables anyone to gain some level of exposure to private market tech companies.
Forge’s story is really a story about the evolution of private markets.
Over the past decade, much of the value of companies has been captured in private markets. This was a departure from the time when companies like Microsoft or Amazon achieved most of their value creation in public markets, which was accessible to all.
In 1999, the median age of tech companies at IPO was 4 years. In 2022, the median age is now 12 years. Median valuation at IPO has increased as well over that same time — increasing over 6.1x.
That meant it was a select few institutional and wealth individual investors who were able to benefit from the growth in private markets. And it also meant that founders and employees may have been wealthy on paper thanks to a high valuation of their company’s stock in private markets, but had little options in the way of accessing liquidity.
And with significant capital raised recently by venture and growth funds to invest into private markets, it’s unlikely that capital flowing into private markets will abate anytime soon.
Sohail Prasad and Samvit Ramadurgam were prescient to identify this trend of private companies staying private longer. They founded Forge (fka Equidate) in 2014 to build a secondary market for private company stock where founders, employees, and investors of private companies could sell their shares.
Forge has since evolved to create a comprehensive private market solution for both companies and investors alike as they provide a core market structure solution across the lifecycle of a private company stock trade.
Forge is now a marketplace to buy or sell private company stock, a data provider to efficiently price assets in an opaque market to enable price discovery, a custody solution to service assets and provide clients with a wealth management solution, and an infrastructure provider to companies with managed liquidity programs to help founders and employees access liquidity so they can continue to build their businesses.
In 2018, when we invested in Forge, we identified a market structure evolution that was occurring in the alts space.
Technology, from iCapital to AngelList to Republic, was being built to enable more access, efficiency, and transparency across the lifecycle of an alts investment.
Private markets would, in our view, become the new public markets. And technology solutions needed to be built to enable this market structure evolution to happen.
In Kelly Rodriques, Forge’s incoming CEO at the time (and April 2021 Alt Goes Mainstream podcast guest), we knew someone who had built a successful custody and asset management business in the alts space. We were lucky enough to work with Kelly at his prior company, Pensco, a self-directed IRA business that sold to Opus Bank for almost $100M in 2016 thanks to an introduction from Pensco and Forge investor and board member, Stephen George of Panorama Point Partners (now InterAlpen Partners).
Kelly had a vision to create a more efficient and transparent private market with Forge — and to build a business that had the benefit of flywheel effects from a marketplace to exchange private company stock, a self-directed IRA custody solution, and data on private markets.
Forge has built a strong distribution network, which we believe is critical to building a successful alts investment platform. Distribution is the key ingredient to enabling an alts investment platform to scale.
With over 21,000 trades processed and $12 billion in transaction volume, Forge is just getting started as they make private markets more accessible, making alts go mainstream.
Congratulations Kelly, Sohail, Samvit, and Team Forge on your work to unlock access to private markets. You all worked so hard to make this happen and we’re excited to see how you continue to innovate in private markets.