Opportunistic investors are giving up obsolete pre-IPO companies, a new report shows • businesstraverse.com

It’s a tough time being a high priced company that didn’t go public when earnings were good. Not only are there fewer later-stage players with the resources and willingness to support such companies — SoftBank and Tiger Global, for example, have drastically pulled out — but even secondary investors have lost interest.

That is our reading of a new report by the private securities marketplace Forge, itself went public in 2021 by merging with a special purpose acquisition company. According to the report, 40% to 50% of investor interest on the platform in 2020 was focused at “various points” on companies that have been in business for more than 10 years, in recent months interest in companies 10 years or older has fallen to just 8 %.

Forge speculates there are two reasons for the trend, including that 2020 and 2021 were big years for IPOs and that many investors were eager to get ahead of public market investors. It also notes that last year some highly valued companies, such as Stripe and Instacart, lowered their valuations massively in response to “changing investor interest in risky assets and tight macroeconomic conditions.”

We would go even further and assume that investors are simply finding better deals in the public markets right now. Why spend money on a potentially overvalued private company that has missed its chance to go public when there is so much to buy that is also much more liquid?

Consider Forge itself; valued at $2 billion at the time it was launched, the outfit currently has a market cap of $340 million, which is not much more than the $238 million VCs had poured into the company when it was still privately owned .

It’s not all doom and gloom for mature, private companies; there seems to be a tipping point when it comes to how old is too old. According to Forge, while it has seen a big shift to younger companies in the secondary market, it says that in the fourth quarter of last year, the “sweet spot” for companies in today’s market — and over time it seems — are decacorns. who are between six and ten years old. In fact, the report specifically mentions interest in companies such as Disagreement, Databricks, bell and Air table.

Here’s the chart Forge put together to highlight what’s happening:

Image Credits: Forge

Shreya Christinahttps://businesstraverse.com
Shreya has been with businesstraverse.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesstraverse.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

More from author

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related posts

Advertisment

Latest posts

Kavanaugh praises “good relations” between judges on the divided Supreme Court

WASHINGTON — Conservative Justice Brett Kavanaugh said the Supreme Court is not as divided as members of the public might think. He praised...

12 things I learned at Uber, Instawork and Intro

Opinions expressed by businesstraverse.com contributors are their own. My entrepreneurial journey started when I was 12. I decided to take a shot at going...

IIoT is driving the transition to Industry 4.0 and enterprises should not risk being left behind

View all on-demand sessions from the Intelligent Security Summit here. The fourth industrial revolution, better known as Industry 4.0, is now happening - and the...

Want to stay up to date with the latest news?

We would love to hear from you! Please fill in your details and we will stay in touch. It's that simple!