I'm Devin Ryan, Head of Financial Technology Research here at Citizens. Really looking forward to this conversation with Kelly Rodriques, who's the CEO of Forge Global. For those that don't know, Forge is a leader in the private markets and a company that we've been really excited about since coming public. It's a pleasure to have you back here, Kelly. I always enjoy the conversations with you. I think maybe just the best place to start for maybe folks who don't know the story as well, just to introduce the company and what is the mission of Forge and what do you guys do? Yeah, great. Thank you. It's a pleasure to be here. Thanks for having me. As Devin said, we're a private market marketplace, and we are a global business with investors and customers in about 78 countries. Our mission really was to develop the technology and infrastructure required to make this asset class an accessible asset class with informed data and to innovate the way investors around the world can participate in the private markets. That includes what you would expect, which is direct investing into private companies that are pre-IPO, but also to use data to enable innovative new products, products like index products and passive assets that the same way you see in the public market. We have been on a journey, and the last few years have been heavily investing in what we call the next generation platform. Some of that has come out in the form of our innovative data products, but some of it, much of it is coming out in 2025 and 2026. Yeah, great. Before we get into the Q&A, I just want to remind everyone that Forge will be reporting earnings, I believe, tomorrow. I'm not going to ask anything around that. Before we get into it, also, Mark Lee is going to be moving to a new role. He was the CFO, and you've recently brought on James Nevin, who is here as well. I'm not sure if you want to just give a quick introduction to James. Yeah, yeah, James is here in the front row. Thank you, James, for coming and being here. James joined us from the London Stock Exchange with a ton of experience around really the shifting dynamic of exchanges and exchange business models and spent much of his career in that transformation of exchange and data business at the LSE. He brings with him tremendous subject matter expertise and understands what we're up against and has been on the ground for all of about 30-40 days. Really excited to have him. Mark will continue to support James and the company in an advisory capacity, but really excited to have James on board now. Yeah, terrific. Welcome, James. Maybe just to start on the state of the private markets, it's been a volatile last few years, clearly. Just capital markets overall have been quite volatile. It seems like the IPO market's trying to reopen, and I think there's an appetite for that to happen, albeit we need markets to probably settle down here a little bit. Just love to get a sense of kind of the journey that you've seen in the private markets, because Forge has been executing quite a bit head down over the last few years, even as the market's been challenged. Maybe talk a little bit about the market right now, and then I'm going to want to get into things that Forge specifically has been doing over that time as well. Great. Everybody recognized what happened in 2021 just in terms of superheated valuations. The private market was a beneficiary of that period, and we saw the run-up over the previous six or seven years. As 2021 came to a close and the war in 2022 kicked in, we saw a massive shift in pricing, and we entered a period that we called the Great Reset, which was valuations coming down dramatically in the private markets and a lag between the actual liquidity and realization of those valuations. The market was largely stagnant and really was selling at very low volume in 2022 and 2023. What started to happen in 2024 is a thawing out, of course. We started to talk about the tipping point. What we see now in the market, as reported by some of the data, is the bid-ask spreads have now narrowed to about 8%, which is the sign of a healthy market. We saw an incredible buy-side demand in the last few months, the largest we've seen in the history of Forge. The private market index, which we track, the 75 biggest names, is up over 30% in the last three-month period. This is absolutely a moment where we're pretty confident in saying the market's back. We are still in a market that trades pretty heavily on the top end, the top 60 names. We track 500-600, but that's kind of where we are. AI, obviously, has been a big theme in the last quarter, as everyone would say. Yeah. Why do you think from the buy-side, all the increased attention, is that because there's themes that people are more attracted to, whether it's artificial intelligence or maybe crypto is now kind of getting reopened in the U.S.? Is it thematic, or is it because now people are thinking the IPO market's going to reopen, so there might be a catalyst for an event that would create kind of a new valuation function for companies? What do you see driving the renewed interest? Is it just time that it's been a couple of years and people have kind of reset expectations and now we need to start moving forward with our lives and making decisions around investing? You know, it's kind of a convergence of all of those things. I'd say last year when AI started to really go off, people were very focused on the big AI names. Certainly that's been part of what's driven, and that drove much of the index performance for sure in the last two, three quarters. We're also seeing just a broadening of interest in terms of companies outside of AI. Crypto, obviously, highly sensitive to the pricing out there. We've seen companies like Stripe and others that are starting to report valuation increases that are substantial. The market is turning in terms of valuation. I think in a weird way, a lot of people are coming to the private market for the first time now. They missed the last kind of ride-up. I think it's an asset class that a lot of institutions are now talking about that are moving into. We're seeing really the convergence of all of those things. You see it in some of the big names. We coined the Private Magnificent Seven late last year with SpaceX, OpenAI, Stripe, Databricks, Fanatics, Rippling, and Scale. These companies, if you look at how they've gone up, you can see in this graph, I don't know if it's up on the screen, but incredible performance over the Public Mag Seven in the last year. Really a lot's going on. Yeah. Just even over the last year, you've had some pretty interesting product announcements at the company on your "next generation platform." I guess, what does that mean? You announced Forge Pro, Forge Data. Data seems like a big part of the strategy. Just talk about some of the things that you've announced and how you're executing on your strategy over the past year. Yeah, thank you for that. We believe, and I said this at the beginning, that the private market needs to have a next generation platform. I came into this industry from more of a software background. I observed that the combination of not just pricing data and a trading venue, but a highly integrated and scalable platform needed to be built, and it could not be done in a single year. We came public as the market was coming down, and we raised money, and we have been investing aggressively during a very difficult time for the private markets. Pro and the data play in general are meant to be a utility for the market to help make investing decisions. The same way you would use advanced trading tools and data and analytics for the public market, we believe the private market needed that. I'd say the rest of the journey is really about building a highly automated experience. If you think about Vlad, who was just up here a second ago talking about being technology first against incumbents that are large legacy players, we believe we're at the dawn of a new asset class here, and we're going to build this greenfield capability around data and high automation. That's really what the next generation platform has been. Pro is now being used by a significant number of our institutional clients because Forge does play both an institutional role and kind of a retail or high net worth segment. Pro was really launched last year to address institutional. I'd say what you should look forward to in the coming months and years is our automation innovation for the broader market and really accelerate access that way. Yeah. How much of the market right now is individuals that are participating in the private markets buying and selling to each other versus employees of a company selling, and then you find the buying liquidity? How much is it kind of a closed loop market versus you still need the sellers to show up, which are essentially the companies or people associated with the companies? Yeah, it's an interesting dynamic around the relationship between the various constituents in this market. What started out a few years ago was the market was primarily powered by employee sellers and people who were sophisticated enough to understand what they were getting into. Because obviously, beyond price discovery, there's a lot of disclosure and opaqueness involved in investing in private companies. I'd say the last three years has seen a pretty steady evolution in terms of both participation and transparency. One of the factors is companies are now starting to embrace the idea that liquidity is a reality for a private business that's going to stay private for 13 to 17 years. That's a massive shift in how long a company takes to actually go public. What comes with that is more disclosure, and I think a willingness for companies to both allow and encourage liquidity at some point before they go public. Combine that with the fact that a lot of people are coming into the market who are looking at public market returns and saying, "Hey, you know, this company that's going public with a $5 billion or $20 billion valuation, this looks like the size of a public company 10 years ago that had been public for a long time." Previously, that company would have gone public at a valuation of $500 million or $600 million. If you want to get in early, if you want to catch that ride, you're going to start looking down into private pre-IPO companies. That convergence is now changing the market dynamic. It's becoming less about, particularly at the high end, we run these SPV structures, which are fund structures that sit on 100 cap tables of the largest private companies in the world. Those trade more like a traded stock where you've got people coming in and coming out that are not dependent on the employee base as much as maybe a company that just starts to trade for the first time. Yeah. Do you think that's really interesting, the SPV theme? Does that become a bigger part of this market? You need the issuance, you need the market to get populated with shares, essentially, or with equity. Where it really becomes efficient and more like a public market or the turnover increases is when you do not have to have that complex and lengthy connectivity back with the company, right? Is that how things are evolving, and where are we in that process? It would seem like you can turn over more. There is a lot more opportunity for. What you're describing now is the tipping point where the market becomes more liquid. When it becomes more liquid, then it will trade more closely like a public market. The real question is, well, what drives that liquidity? There are really a couple of factors, one I just described, which is the size and relative trading interest in the big single names. Those are really the top 20, 30-60 names. The other thing, Devin, that we're really excited about are some of these innovative products that are coming to market. We announced using our index a few months ago that a third-party asset manager was going to basically track our index to build a passive fund. Now, when passive funds start tracking indexes in the private market, it will create additional liquidity for the underlying positions that that index holds. One such fund is called Equidity. We announced this last year. Yesterday, Equidity filed with the SEC to put a 40-act, non-accredited tradable fund out into the world. Again, products like that will bring people into the private markets that will create more liquidity, more exposure, and beyond the single names, because we all know that what makes the public market liquid also are ETFs and indexes and other passive products that you can invest in. We are really excited about that development. Yeah. Also thinking about kind of the sell-side equation, talk about the work you're doing with standardization of documents and just working with companies. I think another from the outside challenge for the market has just been that there hasn't been great standardization, and so therefore that creates friction in the process of being able to transact. Also there's kind of an education curve for companies to get comfortable. If you kind of can help standardize the process for them and say, "Hey, here's what we've done for all these other companies," and it's very simple, that's going to increase their appetite, at least in my opinion, to want to engage and transact. This man is asking every question that someone would need to know to understand this space. I thank you for that. That really is kind of the last mile question. It is not surprising, it should not be surprising that so many people want to invest in AI, they want to invest in SpaceX or the big name Megacorns that are private. The challenge is to do this at scale with volume requires a structural shift in the way trading happens, and the standardization of that has to do with companies plugging into these platforms. When we talked about the next generation platform, we talked about and thought about the strategy of formulating an architecture that could trade globally and deal with the different regulatory regimes that buyers and sellers could be in, as well as the underlying process for automating how someone can accreditate themselves. You see this today on the crypto platforms, actually. Coinbase does this really well. Robinhood and others have managed to blaze this trail, which is how do we know who you are, get yourself KYCed, go through that process, and then hook that up into an integration with issuers, which allow you to trade. That really is the final mile of the next-gen platform. This is what I say when I think about 2025 and 2026 in terms of the investments that we're making now. We are really excited about that future. Yeah. I want to just touch on the election. It seems like private markets is an area that both sides of the aisle seem to be coming together on, that investors should have protections, but also kind of improved access to investing solutions. How do you think about, or I guess, is there anything that's happening in D.C. that's making you optimistic around the future for maybe more engagement in private markets, particularly on the retail side? Yeah. Look, there is. And we try to take an active role in those conversations. As a public company, I've been exposed for the first time to how important it is to make sure policymakers understand the incredible potential of this asset class. If you think about it right now, we've got about $17 trillion-$18 trillion in the U.S. Retirement System. And much of the assets that are held there are not returning the kind of long-term return which would satisfy many asset managers' expectations about what retirement looks like 10 or 20 years from now. So what we've been trying to do is educate policymakers on the potential here. It hasn't taken long for both sides of the aisle to see this. There is a lot of interest in figuring out, one, and it's obviously dependent on who's in charge, but how do you balance the opportunity to provide returns to investors in the US for an asset class that they just haven't been able to participate in? Trying to get into a private equity fund is hard enough. Trying to get into a venture fund or into individual names can be impossible if you don't have the right connections. The concept of access combined with the protections of safety and soundness and transparency of pricing, I think that serves everybody's interests. We are seeing significant bipartisan support for promoting access to the private markets. We are optimistic about where that's going. Great. I want to talk about the international strategy a bit. Obviously, you guys have been making moves internationally. You think about some of these huge themes, artificial intelligence, you're hearing countries talking about wanting to, the U.S. now wants to be the leader, but that drives kind of a chain reaction of other countries saying, "We need to invest hundreds of billions of dollars," and that money's going to get invested into companies in a lot of cases. Those companies are going to have to take capital in and then also at some point have capital out. How are you guys positioning yourselves internationally and what are some of the big trends you're seeing internationally as well? Technology seems like is a big one. Yeah. We looked at the global market five years ago and said, "We need to have a technology strategy for an international business." We think the private market is a global phenomenon. The U.S. is probably five years, maybe six years ahead of where Europe is. If you just look at what trades and who's investing, we wanted to get into Europe early. We announced Forge Europe a couple of years ago. We're now starting to see revenue materialize in our 2025 plan. Really, both the U.K. and European continent now has a group of people that have been trained by Forge to work there. We built an API connection from our global order book that makes it accessible to European investors to see what's available for investment in U.S. companies. A lot of what's happening right now is you've got European interests in U.S. companies. We're not seeing as much yet, and there's a lag effect of U.S. investors interested in European countries. Obviously, there's the big European unicorns that everybody knows, the Revoluts of the world, the Klarnas of the world. We believe that building the technology to be able to integrate in both directions and then creating the regulatory frameworks is where we're going to be over the next five to seven years. We'll extend into Asia at some point. Right now, we are focused and have a very skilled team now in the U.K. and Germany. We're excited about it, but it will continue to be a little bit of a trailing success story. The speed with which emerging companies are raising capital in Europe is actually exceeding the U.S. market just in terms of the interest of new names in those markets. Interesting. Not Not a financial question near term, but kind of longer term. Obviously, you've taken some expense actions to get the business in a better position. Talk about how that has gone and then how you think about kind of the longer-term financial profile of the firm. Kind of what are you targeting? How do you guys philosophically want to run this business? Hopefully, the revenue environment gets better as well, which we'll talk about, I'm sure, with earnings. Yeah, I'd love to just get a sense philosophically how you're thinking about the financial profile. We recognize that the public markets, given both our size being relatively small and the fact that we've invested so much capital the last few years, has not given us some of the credit for what we think of as the long-term shareholder benefits that we're creating in our next-gen platform. We've sent a message to the market, and if I say anything that you take away today, take this, that we are committed to reaching our cash flow break in 2026. The combination of efficiency gains from the rollout of next generation platform technology in 2025 and beyond, as well as our expected improvements in the overall environment, gives us confidence in standing up here and saying, "We credibly believe profitability and expansion of our margin will start to take effect in 2025 and 2026." Our philosophy is we do not and never wanted to run a money-burning business, but we also recognize that it was going to be a pretty big investment to get out in front of the competitive set in our market. Just about everybody else we compete with is a sort of legacy type broker-dealer, and anybody that has built any technology is doing relatively small volumes compared to us. We really wanted something to be scalable, so we took the risk of making those bets in 2023, 2024, 2025, but they are now starting to turn the corner. We are really excited about visibility into 2026. Our cost actions that we made at the end of last year are another indication of that. We will continue to be aggressive in getting ourselves to profit between 2025 and 2026. Yeah, that's great. Just to kind of bring it all together, as you think about private markets, we're obviously very bullish on the secular opportunity over the next handful of years. I mean, the market turns over, I don't know, 20 basis points. I don't know the exact numbers, but public markets are turning over a couple hundred percent one to two times a year. It doesn't feel like there's that much that needs to change to see private markets in terms of transaction activity double, triple, quadruple. I'm curious to kind of just get a sense of kind of your optimism around over the next five years. Is this market multiples of the current size, or how do you think about kind of what you're playing for? Because to me, it's one of the most exciting parts of financial services and fintech, in my opinion, but I'd love to just get your sense to close it out here. Yeah. Here is how I'd close this out. There is no doubt in my mind that more liquidity is coming to this market, and particularly to the top end of the market. I think what makes this market really open up is when platforms are available for companies not only to provide secondary liquidity for shareholders, but for products that drive a larger range of participants that can actually also move primary capital onto the balance sheets of these companies. We have been involved in a few of these, and we see the market starting to look at a private market platform that expands beyond liquidity and into capital raising. Some of these indexes and innovative products will make that go faster. When that starts to happen, then you'll see material pieces of cap tables start to be available, if not for liquidity, then for capital to actually flow into these companies. Yeah. That's great, Kelly. Thank you so much for joining us. Kelly Rodriques, Forge.