Forge’s SPAC deal is a bet on unicorn illiquidity – TechCrunch

As Warby Parker, Freshworks, Vibration and Toast are listed next week, we should not forget the SPAC rally. This week, for example, Forge Global (Forge), a technology startup that manages the market for secondary transactions in private companies, announced that it would be unveiling a blank check combination.

And while we’re not unpacking every SPAC compound that crosses our radar, Forge is good for deal time analysis.

The exchange seeks startups, markets and money.

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Why? Many reasons. First, we are curious about how the company generates revenue and how diverse its revenue is. We are interested in how big the market can be for trading secondary stocks in Unicorn લે late-stage tech startup equities are popular on secondary exchanges. In addition, we want to know if this deal seems expensive, as it could help us investigate the heat more broadly on the SPAC market.

First, some details regarding the transaction. Then we’ll have fun. To work!

Forge SPAC

Forge Motors is merging with Capital, a blank-check company that raised 60 360 million in December 2020.

According to the company’s calculations, the joint venture will be valued at approximately 2 billion on “fully dissolved equity value on a pro form basis”. Expected of the company Enterprise The value for the $ 435 million cash expected after the deal is completed is $ 1.60 billion less, although that number will change slightly before it is traded.

Leaving aside the noise of the transaction – there is PIPE, 90% equity rollover from existing shareholders and more, if you want to get into it – the important thing is that Forge will be worth about 2 2 billion in terms of equity and hundreds of millions of dollars in the bank after the transaction.

The resulting valuation is significant 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 appears ready to offer more tangible returns than its initial supporters; Private investors who have recently invested in the company should also do well in the deal.

It brings us to the company’s business and business model. Forge helps pre-IPO companies trade before they float. It is somewhat ironic that the price discovery is something that the company claims can help companies before its platform debuts, while the company is preparing to quickly beat its private valuation by a public debut.

Regardless, let’s talk about unicorns.

The solution to the unicorn traffic jam?

One of my favorite long-term issues with a late-stage startup market is that it’s better to create value than to find exit points for accrued value. More simply, the startup market is excellent for making unicorns but a little weak to take them to the public.

Those distrusting regulatory concerns have made it difficult for wealthy tech companies to create promising startups that are only part of what could challenge them. Even this year there are not enough IPOs to balance the growth in the number of global unicorns.

That pressure is a good thing about why Forge is such an interesting company. The more uncertain the unicorn in the world, the greater the demand, which is likely, for a marketplace like the one it operates, allowing existing shareholders in valuable private companies to run liquidity for themselves before entering the final public-market.

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