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March 2023
Private Market Report - March 2023
Calm before the storm
The latest edition of our Private Market Report suggests that market conditions may have stabilized somewhat during the month of February. Bid prices, the average bid-ask ratio, and the bid-ask spread were all relatively flat against January.
Nonetheless, uncertainty abounds in the secondary market, particularly in the days since Silicon Valley Bank’s collapse during the first week of March. Early indications are that this event has caused a further widening of the bid-ask spread and lower liquidity on platform. The broader impact of SVB on the startup ecosystem remains to be seen.
Marketplace highlights
264
Private issuers with activity on the platform during the month
1,167
Live orders to buy or sell on platform
63%
Average transaction price as % of last known funding round
$1.11Bn
Value of listings for sale on the platform
Market momentum
Median bid and ask
While the market remained depressed in February, both the median bid and ask (vs last primary funding valuation) moved slightly upward compared with January. This sign of stability may reflect a rebound in general financial market sentiment in recent weeks. Meanwhile, both the volume of securities for sale and total market activity on the Hiive platform, expanded significantly during the month, by 32% and 34% respectively. These numbers may reflect increased motivation amongst private stock holders to generate liquidity as high rate conditions continue to place downward valuation pressure on, and constrain liquidity for, technology startups. The effect of increased motivation by sellers is conflated by the underlying user growth at the Hiive platform which has been significant since its launch in July 2022.
Bid/ask ratio
The ratio of the number of bids to asks on the Hiive platform was essentially flat, providing further evidence of short term stability in the market. In light of the significantly higher total number of orders on the platform this month vs last, this suggests a net increase in both buyers and sellers during the month.
Average bid/ask spread
The bid/ask spread narrowed marginally by 140 basis points on a month over month basis, suggesting a slight increase in liquidity during the period. Nonetheless the average spread between orders to buyer and orders to sell remained near recent highs.
With the news of Silicon Valley Bank’s failure coming shortly before publication of this report, we anticipate a further tightening of market conditions in the secondary market for unicorn shares, and consequently a further deterioration in liquidity.
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