Forge Global-2022 Q1

  • The company’s gross revenue in Q1 2022 was $20.02 million, a decrease of 33% from the previous quarter and decrease of 38% from the same quarter last year.
  • After transaction based expenses, Forge’s Q1 2022 gross profit reached $19.89 million, a 33% decrease compared to the previous quarter and a 36% decrease compared to the same quarter last year.
  • Operating expenses in Q1 2022 were $58.64 million, a 66% increase compared to the previous quarter and a 103% increase compared to the same quarter last year.
  • Net loss for Q1 2022 was $64.42 million.
  • As of March 31, 2022, the Company had $204 million cash and cash equivalents.
  • On March 22, 2022, Forge was officially listed on the New York Stock Exchange under the ticker symbol: FRGE.

Company Overview

Founded 2014 Jan
Sectors Private Equity, Capital Markets, Financial Brokerage
Address CA, U.S.A

Management Team

Kelly Rodriques CEO
Mark Lee CFO
Jose Cobos COO
Megan Hanley CMO
Nick Grabowski CTO
Norbert Ngethe SVP, Head of Legal
Jennifer Phillips President & Head of Private Securities

Board of Directors

Kelly Rodriques CEO of Forge Global
Steve McLaughlin FT Partners
Christoph Hansmeyer Deutsche Boerse AG
Stephen George Panorama Point Partners
Blythe Masters Motive Capital Corp
Ashwin Kumar Motive Capital Corp
Kim Vogel Trico Bancshares & Tricounties Bank
James Herbert III First Republic Bank

Note:

1.After the SPAC public listing of FRGE, Peilung Li, Eric Leupold, Jane Atherton, and Greg Brogger had left the Board of Directors. At the same time, Blythe Masters (CEO and Director of Motive Capital Corp), Ashwin Kumar (Partner of Motive Capital Corp), and Kim Vogel (Director of Trico Bancshares & Tricounties Bank) joined the Company’s Board as its newly appointed Directors.

2.In April 2022, the Company added James Herbert III, Founder of First Republic Bank, to its Board of Directors.

Current Operations

Forge’s business has been reorganized into 4 main lines of business, (1) Marketplace (2) Capital Systems (3) Trust (4) Data Platform.

Corporate Structure (Subsidiaries)

Financing History

Time Round Amount ($ m) Price($) Investors
2014-06 Seed $0.5 NA Scott Banister, Structure Capital, StartCaps Ventures
2017-03 A $3.0 3.82 Draper Associates, Peter Thiel, Streamlined
2018-07 B $85.0 10.66 Financial Technology Partners, Panorama Point Partners, Munich Re, BNP Paribas and Operative Capital
2020-11 Merger with SharesPost Inc. NA NA NA
2021-05 B-1 $150 12.42 Deutsche Börse AG, Temasek, LUN Partners Group, Wells Fargo
2022-03 SPAC $216 31.229 ($10.00 as converted upon public listing ) Motive Capital Corp,etc.

Financial Analysis

The company’s gross revenue in Q1 2022 was $20.02 million, decreased 33% from the previous quarter and decreased 38% from the same quarter last year.

2021 – 2022 Gross Revenue (in thousands)

Q1 2022 Revenue Composition  (in thousands, %)

Trading revenue*1 was $14.59 million in Q1 2022, representing 73% of the revenue for the quarter, a 40% decrease from the previous quarter. Trust Revenue accounted for 27% of the total revenue for the quarter at approximately $5.44 million, a 2% increase compared to the previous quarter.

After transaction based expenses,  Forge’s Q1 2022 gross profit reached $19.89 million, a 33% decrease compared to the previous quarter and a 36% decrease compared to the same quarter last year.

*1. According to publicly disclosed data, the Company classified FCS business (Forge Company Solutions) revenue as trading revenue.

Operating expenses in Q1 2022 were $58.64 million, a 66% increase compared to the previous quarter and a 103% increase compared to the same quarter last year. In Q4 2021, the Company’s main expense was Compensation & Benefits, which is  currently 76% of operating expenses at $43.64 million. Of note, $17.7 million of the compensation & benefits were one-time transaction bonuses that were paid out upon the consummation of the SPAC merger and will not be recurring in the ensuing quarters. Acquisition-related transaction costs accounted for 6% of operating expenses, which was $3.71 million. Professional Fees accounted for 6% of the total operating expenses, which was $3.52 million.

Q1 2022 Top 5 Operating Expenses (in thousands)

Net loss for Q1 2022 was $64.42 million.

As of March 31, 2022, the Company had $204 million cash and cash equivalents. The gross proceeds was $216 million from its SPAC public listing.

Recent Developments

Operating Metrics

According to publicly disclosed data, during Q1 2022, the transaction volume was $418 million and the average of net take rate was about 3.5% in Q1 2022.

2020-2022 Quarterly Volume and Net Take Rate (in millions, %)

Business Partnerships

During the Q1 2022, the Company’s Data business, Forge Intelligence, acquired to key institutional customers, Citadel LLC and Wells Fargo Securities.

Citadel LLC is an American multinational hedge fund and financial services company with an AUM of more than $250 billion. Citadel LLC will be using the Forge Intelligence platform to support its own hedge fund management business.

Wells Fargo Securities is the comprehensive investment banking division of Wells Fargo, serving institutional asset managers, public, and private funds as its clients. Wells Fargo Securities will be using the Forge Intelligence platform to support its clients in research and analysis of the private markets.

Going Public

On March 22, 2022, Forge Global Holdings completed its SPAC public listing at an initial listing price of $10.00 per share and in the process, successfully raised $216 million USD in gross proceeds, including $97.6 million tied to the SPAC Trust and $118.5 million from the concurrent PIPE fundraising round.

Stock Price

Forge Global Stock Price Trends (3/22-5/23)

Max  $37.64

Min  $11.70

VWAP  $23.11

 

Forge Global Stock Price Change% (3/22-5/23)

Market Overview

The Global Unicorn Market

According to CB Insights, as of December 2021, there were a total of 959 unicorn companies in the world, an increase of 175 companies compared to June 2021 (784 companies). Aggregate valuation of all unicorn companies was over $3.12 trillion USD.

Among the 959 unicorn companies, 14 companies have valuations greater than $20 billion USD, increased 4 companies compared to June 2021, and combined valuation was $684 billion USD.

Unicorn Companies of Valuation above $20 billion

Source: CB Insights

Of the 959 unicorn companies, 114 companies’ valuations are between $5 billion – $20 billion, with their aggregate valuation totaling $930 billion, representing 30% of the aggregate valuation of all unicorns.

There are 831 companies with valuations between $1 billion and $5 billion. This group commands an aggregate valuation of $1.5 trillion, representing 48% of the aggregate valuation of all unicorns.

From an industry perspective, fintech is the industry with the highest concentration of unicorn companies, with a total of 194 unicorn companies, accounting for 20% of total unicorn companies at an overall valuation of $726.7 billion. The internet software and services industry is close behind, with 174 companies representing 18% of the world’s unicorns, with an overall valuation of $501.2 billion. In third place is the E-commerce & direct-to-consumer industry, with 107 companies on the list and an overall valuation of $300.6 billion.

Industry distribution of global unicorn companies at the end of December 2021

Source: CB Insights

From a geographical perspective, the US has the largest number of unicorn companies at 487, representing 51% of the total count. China trails in second place with 170 unicorn companies, representing 18% of the total. Other key countries include the India, UK, Germany, and Israel, with 55, 37, 25 and 21 unicorn companies, respectively.

Global Venures Exit

According to CB Insight, the current global venture capital exit is still dominated by M&A. In 2021, there were 10,800 M&A exits, an increase of 58% from 2020; a total of 950 IPO exits, an increase of 47% from 2020 ; SPAC exits totaled 125, an increase of 250% from 2020.

2015-2021 Venture Capital Exit Methods and Trends

Source: CB Insights

From a regional perspective, global venture capital exits in 2021 were mainly concentrated in the United States, accounting for 40% of the total number of exits, followed by Europe, accounting for about 30% of the total number of exits.

2015-2021 Venture Capital Exit Breakdown (by Region)

Source: CB Insights

 

Competitors

Equity Zen

2013 – New York

Facilitates the trade and liquidity of Silicon Valley’s largest unicorn  companies. Like Equidate, EquityZen also focuses on providing options contracts and other  derivative products that allow retail investors to gain exposure to the private growth asset class.

The platform completed 18,000 transactions across 250 different unicorn companies’ shares over its 8 year history. Has not provided its cumulative transaction volume figures.

Financing History

  • Angel,$1M,Silicon Badia,Amino Capital,500 Startups
  • Series A,$3.5M,Vaidya Capital Partners,TSVC
  • Series B,$3M,Draper Associates

Recent News

  • No resent news

Carta

2012 – Palo Alto, USA

Offers ownership and equity management platform trusted by thousands of founders, investors, and employees.
As of 2021, Carta unveiled CartaX, a private share trading platform that brokers private market transactions.
The primary cap table management system is trusted by 14,000 companies and manages accounts for over 900,000 shareholders.

Financing History

  • Seed: $1.8M, led by XG Ventures
  • Series A: $7M, led by USV
  • Series B: $17M, led by Spark Capital
  • Series C: $42M, led by Social Capital
  • Series D: $80M, led by Tribe Capital
  • Series E: $300M, led by A16Z
  • Series F: $200M, led by Lightspeed Venture Partners
  • Series G: $500M, led by Silver Lake

Recent News

  • No resent news

Zanbato

2010 – San Francisco, USA

A private securities crossing network providing market data, counter-party verification, and order execution to a membership of broker-dealers and institutionally-sized investors/shareholders.

Over 100 banks and brokers are members of the platform. Over 750 private companies has listed their shares on Zanbato for trading.

Financing History

  • Series A: $5.2M from Webb Investment Network
  • Series B: $13M Sway Ventures, LeFrak Investment
  • Venture Round: $35M undisclosed investor
  • Series C: LeFrak Investment
  • Strategic Round: JP Morgan

Recent News

  • February 2022, Zanbato has announced a partnership with Rialto Markets. Rialto Markets, member of  FINRA, is a regulated broker dealer operating an alternative trading system for private securities including those issued as a Digital Asset Security, as regulated by the SEC.