Analysis: Schwab buys private shares broker Forge for $660MM, down from $2B SPAC price
SPVs Multiply as Pre-IPO Valuations Race Beyond $100B
Gm Fintech Architects —
Today we are diving into the following topics:
Summary: We discuss how secondary trading of private company shares has surged as valuations for firms like OpenAI, Anthropic, and SpaceX exceed $100B and rival public-market liquidity. We explain that platforms such as Forge and Hiive now facilitate billions in private-market volume, with Forge acquired for $660MM after processing $17B in lifetime transactions and Hiive raising at a $650MM valuation. We outline how SPVs, multi-layer fee structures, and contractual restrictions create hidden counterparty risks despite the appearance of liquid, tradable assets. Ultimately, we argue that while private markets are institutionalizing quickly, investors must understand what they actually own — including the layers of SPVs and fees — before participating in these late-stage valuation surges.
Topics: Forge Global, Hiive, Schwab, Morgan Stanley, EquityZen, Nasdaq Private Market, OpenAI, Anthropic, Figure, SpaceX, Revolut, AngelList, Carta, Coinbase, Echo, Visa, Ethereum, Arbitrum, Stripe, Mistral
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Long Take
Private Markets
Navigating capitalism can feel like being lost in the waves of the ocean.
There are trends, markets, and fashions everywhere.
These narratives and memes are vibrations in the connections between the nodes of our social web. Information starts within some grouping of nodes, then ripples out and onwards, crests, and concludes. Sometimes these vibrations are tiny, like the NFT boom and bust. Sometimes they last for decades, like the enterprise value of IBM. And at times, for centuries or millennia, like the shape of countries and national spirits.
You can feel the correlations between interest rates, public markets, private markets, startup entrepreneurs, token launches, and social sentiment.
Maybe it’s the coffee talking. But you develop an intuition for this with enough scar tissue.
And here is where the intuition is pointing us today.
Many people are talking about a potential AI bubble evidenced by (1) product limitations of LLM-based AI agents and the resulting lack of commercial results, (2) over-investment into infrastructure in order to secure a competitive position in a winner-take-all market, and (3) market estimation of potential default on hundreds of billions of investment, via credit default swaps for publicly traded companies like Oracle.
On each of these points, the evidence is still mixed. And not all of these are financial or fintech questions. So instead, we will focus on a part of the world we understand well — private markets.
In particular, we want to look at two recent data points for platforms that provide trading of private company shares through an OTC secondary market. Those companies are Forge, which has recently been acquired for $660MM by Schwab after going public via SPAC for $2B, and Hiive, a more recent competitor which is doing a comparable amount of volume and raising at a $650MM valuation.
There has been an immense boom in secondary trading of shares of companies like OpenAI, Anthropic, Figure, SpaceX and other highly coveted pre-IPO names.
On paper, these companies have shown far better valuation growth and interest from investors than companies that have already gone public. Everyone is chasing the IPO pop by trying to pre-empt it, while private valuations race into the $100B+ range. You can see the outperformance in the Hiive index above — defined by the most liquid private names — relative to the NASDAQ.
Simultaneously, employees of these companies are selling stock, often before repeatable commercial traction kicks in. Though for OpenAI and its cohort, revenues are in the billions.
But there is a darker conclusion that comes from all this activity.