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May 2023
Private Market Report - May 2023
Private market drought
While more users continued to adopt and complete transactions on the Hiive platform in April, private markets overall persisted in their gradual decline. After narrowly dodging all-out catastrophe following SVB’s collapse, the venture ecosystem remained pessimistic. VCs weighed the consequences of this further liquidity drain in an already tough fundraising environment. Sellers, mostly current and former employees of startups, made up the vast majority of new market participants. This continued imbalance resulted in an even greater tilt into a buyer’s market, with steeper discounts, a lower bid-ask ratio, and a significantly wider bid-ask spread. Overall, private markets continued to exhibit negative momentum, without any oasis in sight.
Marketplace highlights
334
Private issuers with activity on the platform during the month
1,626
Live orders to buy or sell on platform
58.2%
Average transaction price as % of last known funding round
$1.35Bn
Value of listings for sale on the platform
Market momentum
Median bid and ask
During the month of April, private markets first rebounded somewhat from the SVB crisis and then resumed a gradual downtrend that has now persisted for many months. The median bid reached a new low for the present downturn of a 61.1% discount to last primary funding valuation, compared with 58.1% in March and 51.7% in February. While buyers got more pessimistic, sellers became more motivated and the average asking price also reached a new low of a 34.7% discount to last primary funding valuation, down from 33.2% in March and 30.4% in February. Private markets continued to diverge from public markets as the average discount at which transactions were agreed on the Hiive platform reached a new high of a 42% discount during the month.
Bid/ask ratio
The ratio of the number of bids to asks on the Hiive platform remained largely unchanged. This was despite a significantly higher total number of orders this month, and a net increase in both buyers and sellers.
Average bid/ask spread
The bid/ask spread narrowed further by 70 basis points on a month-over-month basis, suggesting that liquidity was essentially flat during the period. The average spread between orders to buy and orders to sell remained elevated.
Activity on Hiive reached new highs in spite of the SVB crisis but this may also reflect growing adoption of the platform by market participants, rather than an increase in liquidity. Continuing downward pressure on bids will put a ceiling on liquidity for the time being.
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