Private market valuations and trading trends.
63% of the last funding round. That’s the current clearing price of most private companies trading on the private secondary market right now. It’s up from a low of 52%. Say AI one more time baby.
Companies that allow secondary transactions.
In January, the private market began to reflect the momentum that public markets have built over the last 6 months. Moderate gains across bids, listings, and the average transaction price signalled growing optimism across the board. Most notably, the median bid (expressed as a discount to the last round) jumped from 57.2% in December to 49.7% in January, reaching levels last witnessed in 2022. Alongside a notable 30% recovery in the bid/ask ratio from the previous year’s floor in November, one thing is clear— buyers are back in the market.
It may be too early to call an end to the downturn in private markets that began in early 2022, but there appears to have been a rebound in sentiment from the Fall slump that followed a series of disappointing public debuts by late stage startups including Instacart and Klaviyo. That said, spreads remain at cyclically high levels and trading is still concentrated in a relatively limited number of more bluechip names. Notably, the average transaction price (as a percentage of last funding round value) exceeded the median ask in January, indicating room for shareholders of the most sought-after securities to capture better prices in the market in the months ahead.
Meanwhile, the Hiive platform maintained its impressive growth trajectory across all key metrics. The total value of listings on platform reached a new high of $2.69 billion, with over 4,710 orders for private securities spanning nearly 800 distinct pre-IPO companies live during the month.
Marketplace highlights
797
Private issuers with activity on the platform during the month
4,710
Live orders to buy or sell on platform
63.0%
Average transaction price as % of last known funding round
$2.69Bn
Value of listings for sale on the platform
Market momentum
For the first time in more than a year the median bid landed below a discount of 50%, following an eye-catching improvement moving from 52.7% the previous month to 49.7% in January. The median ask registered an increase from the previous month as well, albeit by a lesser extent from December 2023.
The average transaction price also rose in January to 63% of last primary funding valuation, equalling 2023’s high, after improving from 57% to 59% between November and December. Overall, these signs bode well for private company shareholders as buyers finally seem willing to adjust their prices upward. This could be the market rebound long awaited by market participants.
Bid/ask ratio
At 0.42, the bid/ask ratio remained quite depressed, but continued a gradual rebound from what may have been a cyclical low in November (at 0.32) . Buyers remain in control of the market with roughly 2.5 times more listings than bids on the marketplace.
Average bid/ask spread
Despite the overall improvement in sentiment, liquidity remained low as the average bid/ask spread widened slightly to 28.3% from 27.9% in December. A marked improvement in the bid/ask spread in coming months would signal a sustainable recovery.
Noteworthy flows
Epic Games was one of the most active securities on Hiive with a total of six accepted bids in January. Not surprisingly, the $1.5 billion capital raise that the company announced on February 7th came at a valuation cut of close to 20% from its prior round in 2022. Buyers remained undeterred, actively bidding for the stock on platform, albeit at a 35 to 40% discount to the new funding round.
Flexport sellers placed a total of 37 listings to sell shares on Hiive in January. While the company's stock has been trending downward for almost two years due to serious sector headwinds, it continues to catch a bid on Hiive. Flexport’s shrunken revenues are a cause for concern and its not yet clear whether Ryan Peterson’s return to the helm and a recent $260 million convertible note investment from Shopify will turn things around. While its decision to lay off roughly 20% of its headcount might improve profitability, it may also result in a surge in laid off employees seeking to sell their shares in the secondary market, which could put further downward pressure on pricing.
Klarna is making waves with CEO Sebastian Siemiatkowski’s declaration of IPO readiness. The company was one of the most active on Hiive with ten sellers accepting bids for their Klarna shares on platform in January alone. Klarna’s shares are trading 20% higher than in November 2023, potentially reflecting rising IPO expectations.
Postman, the Indian API platform, was another very active name on Hiive in January with 9 closed transactions amounting to nearly $5 million in volume and peaking at $11 per share (compared with $17.54 at its last funding round). This marks a significant jump from 2023, when the stock attracted limited bidding and traded as low as $6 per share. January saw not only an increase in transaction frequency but also saw a notable improvement in sale values, with the latest transaction closing at a mere 32% discount.
Databricks, Hiive’s most active stock in 2023, continues to be much more liquid than almost any other stock, with 30 active listings in January. The Data and AI company secured $500 million in its most recent round in September at a $43 billion valuation. Databricks’ ease in raising capital in the private market has mitigated the immediate need for an IPO, prompting shareholders to sell in the secondary market. Here, discounts have hovered around 25%.
Liquid Death saw three closed transactions at $10.40/sh towards the end of January, implying a valuation of $1.2bn for the beverage company. Since the company’s IPO announcement in July 2023, the price of its shares have trended upwards on Hiive from $9.25 per share in October to the most recent accepted bid of $11.25 in January. Notably, the company is faring better than most of its peers, with its last trade crossing at a 13% discount versus the 37% average discount across all transactions on Hiive.
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