Forge’s SPAC deal is a bet on unicorn illiquidity

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as Warby Parker, Freshworks, Amplitude and Toast will be listed in the coming weeks, let us not forget the SPAC boom. This week, for example, Forge Global (Forge), a technology startup that operates a market for secondary transactions in private companies, announced that it would go public through a blank-check combination.

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And while we’re not unpacking every single SPAC combination that crosses our radar, Forge is a good one to spend time parsing the deal.


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Why? various reasons. First, we’re curious about how the company generates revenue and how diverse its revenue is. We’re also interested in how large the market could prove to be for trading secondary shares in Unicorns – late-stage tech startup Equity popular on secondary exchanges. Additionally, we’d like to know if the deal sounds expensive, as this may help us heat-check the SPAC market more comprehensively.

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First, some details related to the transaction. Then we have fun. to work!


forge is Fusion With Motive Capital, a blank-check company that raised $360 million in December 2020.

According to the company’s calculations, the combined entity would be valued at approximately $2 billion on a “fully diluted equity value on a pro forma basis.” company’s expected enterprise The value is small at $1.60 billion for an estimated $435 million in cash after the deal is completed, although that number will change somewhat before trading.

Leaving out the specifics of the transaction — there’s a PIPE, a 90% equity rollover from existing shareholders and a lot more, if you want to get into it — what matters is that the forge will be about $2 billion in equity terms and in There will be an investment of crores. Dollars in the bank after the deal.

The resulting valuation is notable not only for making Forge a unicorn, but also for representing a dramatic upward movement in the value of the company. Pitchbook and Crunchbase data agree that Forge was last valued at $700 million (post-money), when it raised $150 million earlier this year. Therefore, the company is set to provide more solid returns than its initial backers; Even private investors who have recently put capital in the company should do well in the deal.

This brings us to the company’s business and business model. Forge helps pre-IPO companies do business before they float. It’s somewhat ironic that price discovery is something the company claims its platform can help companies make ahead of their debut, while the company sees its private valuations increasingly lag behind its public debut. is ready.

Anyway, let’s talk about unicorns.

Unicorn traffic jam solution?

One of my favorite long-term issues with the late-stage startup market is that it’s far better at creating value than finding an exit point for that earned value. More simply, the startup market is excellent at creating unicorns but somewhat poor at taking them public.

That antitrust regulatory concerns make it harder for wealthy tech companies to snap up promising startups that might challenge them is only part of the matter. There aren’t even enough IPOs this year to balance the rise in the number of global unicorns.

The pressure is a good bit on why Forge is an interesting firm. The more unexcited unicorns in the world, the greater the demand, possibly, for the marketplace as it operates, which allows existing shareholders in valuable private companies to drive liquidity for themselves before the start of the public-market .

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