Forge Global Review 2021: Best Startup Investing Platform?

When most people think about investing, their minds go initially to the stock market. With the rise of free trading apps like Robinhood, it has never been easier to invest in this market.

However, there are massive innovations taking place in other asset classes as well. Crowdfunded real estate platforms like Fundrise have democratized real estate investing. Platforms for investing in art have made it possible for everyday investors to access what was once an asset exclusive to the ultra-wealthy.

One of the most interesting investing innovations of the last decade has been the increased accessibility of startup investing. There are now dozens of platforms on the market that aim to make investing in private companies as easy as investing in public ones. Forge Global is one of the companies currently leading the charge on this front.

In this Forge Global review, we’ll detail exactly how to invest in startups on the Forge platform and whether it’s a good choice for investing in private companies.

Forge Global Review: Platform Highlights

• Unlike many other platforms, Forge Global takes a more personalized approach to investing in startups
• All users are assigned a Private Market Specialist they can contact if they wish to invest
• Forge investors have access to many well-known companies like Instacart, JUUL, Chime, and Bytedance
• Forge is a broker-dealer registered with the SEC and FINRA
• Only accredited investors are able to invest on Forge Global
• There is a $100,000 minimum investment on the platform

What is Forge Global?

Founded in 2014, Forge Global provides access to investing in startup companies. Unlike many other startup investing platforms, Forge focuses on institutional investors. Through the platform, institutional investors can buy and sell shares of privately traded companies and startups. This is a valuable service for large pension plans, college endowments, or other large funds that wish to diversify into this asset class.

Individual investors are also able to invest through the Forge platform. However, there are some strict requirements they have to meet.

First, all investors must be accredited prior to investing. This typically means that you make $200,000+ per year or have a net worth of $1,000,000+ excluding your primary residence.

Next, the minimum investment on the platform is $100,000. This is on a per-company basis, meaning that you need to invest 6 figures into a single company on Forge. Clearly, this is much easier for an institution to do than an individual.

How Does Forge Global Work?

On the Forge platform, investors are able to browse hundreds of different private companies. For each company, you’re able to view financial information, fundraising information, and a list of key investors.

If a company seems appealing, you can express interest in investing by filling out a form with the number of shares you want to purchase. From there, your Private Market Specialist will be in contact and help you to fulfill this request. Because there is no active secondary market for many of these companies, it can potentially take weeks or months for your investment to go through.

As soon as that happens, you’ll be able to take advantage of the other side of Forge Global. In addition to brokering transactions, Forge also provides custodial services to hold your private company shares. This is a secure and simple way for you to keep your shares in one place.

Forge Global Returns

Before discussing Forge returns, a brief note on risk is essential. Investing in startups is some of the riskiest investing a person can do. Startups are by definition smaller companies, and in general, this increases the risk that they eventually go to $0.

At the same time, there is also limited liquidity with this asset class. Just because you want to sell your shares does not mean that there will be a buyer on the other side. So even though you might have significant gains on paper, there is no guarantee that you’ll be able to realize them.

However, with this increased risk comes increased return potential. The primary reason that many investors choose to add startups to their portfolios is the upside potential. By getting in on a company early, you have the potential to generate returns far in excess of almost any stock market investment.

With a startup investment, in the vast majority of cases, you’re only going to see a return if the company experiences a liquidity event. This is most commonly either an IPO or acquisition. If you invest in a company when it is worth $50 million and it IPOs at $10 billion, you will see a 200x return on your investment. This is enough to turn $25,000 into $5 million.

But, in 90% or more cases, the company will never experience a liquidity event and your investment will go to $0.

Forge Global Fees

As a broker, Forge Global charges a commission on all transactions facilitated through their platform. Although commission-free trading is now industry-standard for the stock market, the same is not the case for private markets.

On most transactions, Forge will collect a 5% commission for facilitating the trade. This fee also goes towards maintaining the platform as a place to hold your startup investments.

In some cases, Forge will permit investors to make an investment below their $100,000 minimum. In those cases, the commission may work out to a higher percentage of the transaction.

Forge Global Pros

• Access to some of the most well-known private companies of all sizes
• Private Market Specialist to assist with investing in startups
• No carry on investments through the platform
• Strong track record of facilitating 16,000+ transactions in 400+ companies

Forge Global Cons

• High minimum investment of $100,000
• Limited to accredited investors
• 5% commission for investing on the platform

Forge Global Review: Final Thoughts

For wealthy investors looking to deploy hundreds of thousands of dollars into private companies, Forge Global is likely one of the best platforms. No other platform provides the level of personalized attention and resources that Forge does.

However, the high minimum and accreditation requirements make it difficult for everyday investors to access. Because the platform does not allow for crowdfunding, you have to have a substantial enough of an investment to make it worth the administrative hassle.

If you’re not quite ready to invest at these levels, there are a number of startup investing platforms for non-accredited investors that may be a better fit. Many of these platforms allow investors to start with as little as $100.

In conclusion, while Forge Global does go above and beyond most other platforms, it’s likely only a plausible option for millionaires.