Forge Global CEO Kelly Rodriques on SpaceX and the IPO Outlook

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1:29Other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepare by BlackRock Investments, LLC. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. SpaceX moving forward with an insider share sale that values it at about$800 billion. Bloomberg News reported that in December. Private markets, how much these companies are valued, very much of interest to investors.

2:04We spoke about this with Rick Wurster, the CEO of Charles Schwab, yesterday. He weighed in on it. In that conversation with us, he discussed the acquisition of Forge Global, a marketplace for buying and selling shares of private companies. Reminder, Schwab agreed to buy Forge back in November for$660 million.

2:21Kelly Rodriques:And our Forge acquisition was really about democratizing investments and alternatives. We're now going to be able to bring it to all of our investors in multiple different forms and allow them to participate in private markets the way institutions and the very wealthy have been able to. And we're thrilled to bridge that gap and excited for what that could mean for our clients' wealth. That was Charles Schwab, CEO Rick Worcester, speaking yesterday with us here on Bloomberg Business Week Daily. Back with us, Kelly Rodriguez, CEO of Forge Global. Kelly joins us from the World Economic Forum in Davos.

2:53Kelly, I want to get to Davos in just a second. But Rick's comment to you and to all of us about what Forge is going to bring to Charles Schwab, he's been talking about the acquisition. How do you see yourself? How do you see your company fitting into Schwab?

3:10Kelly Rodriques:So it's a really interesting time in the market. The private markets, which have historically been thought of as an alternative asset class, are really going mainstream now. This is a year and the performance bears this out. If you've seen some of the recent data we've put out. But I think Schwab and others are coming to the conclusion that America's investors need to participate in this asset class. And it's a really exciting time because they want to provide access. That was our mission nine years ago when we started. So they've been watching us for a while. This is a really exciting development for investors and for Schwab.

3:44Hey, my understanding is, I guess that deal, right, we did. We actually were at Schwab Impact on the day it was announced. And we talked with Rick about it then. And it is expected to close in the first half of 2026. Are you guys still on track for that as much as you know?

4:00Kelly Rodriques:Okay. Absolutely. Hey, you know, it is interesting too, and Tim and I talk about this all the time in terms of private markets, how much investors are certainly interested in that. And that's where they want exposure. I am curious about what are the conversations you're having on the ground in Davos when it comes to private markets, private interest. Give us your take. So if you're talking to the capital markets or investing crowd, this is a theme that is a global theme. Our biggest growth this last year came from our European and UK offices. But the other big theme that's here in Davos is AI.

4:42Kelly Rodriques:AI is everywhere. You cannot believe it's in every conversation. And if you walk down the main strip in Davos, AI is the theme of the conference for sure. And 19 of the largest AI companies are tracked by Forge because they're still private. So the conversations are nonstop about the convergence of both the AI sector. Are any non-AI companies getting any love right now? Oh, yeah. The number two sector is defense and aerospace, and it was up 140 % this year. Is that just SpaceX? Oh, no, that's SpaceX. That's Anduril. That's Adventurer. There's there's a there's a whole bunch of them in there. And they're really interesting to the global audience, too.

5:28Kelly Rodriques:Do you know, do do. OK, so I want to remind everybody what you do. You you you basically take you allow people who own equity in private companies to sell to find buyers who are accredited investors to then buy the shares. So like if you're an early employee at Anduril, for example, and you have equity and you want to buy a house, maybe you want to get some liquidity, you can go to Forge Global and you're going to prepare them with a buyer. Correct. yeah that's one use case okay so are you having because the growth of these companies has been so quick are you having trouble finding people who want to part ways with their shares because they're like hey this is a rocket ship and uh i want to hold on for as long as possible yeah depending on what company you're talking about there is a supply and demand dynamic that's always at play for the most popular high performing sectors and that's ai uh defense and aerospace and fintech is up over 100 this year those companies are are sought after and you do have supply and demand imbalances that's not true across the entirety of the 600 names or so that trade on forge but in the hot ones yes there's a lot more demand than there is supply what about what what What kind of activity are you seeing around SpaceX specifically?

6:54Kelly Rodriques:I mean, SpaceX and the big AI names are the top names that trade at Forge. They're in the top 10. And they have been, I mean, SpaceX has been a sought after company for the last five years. But it's really been the last two years. Their broad base of investors have really poured into it. You know, I think what's fascinating, Kelly, and this again goes back to something we've been talking about for the last two, three, four years, and you see it at Milken, just the rise of private markets, private credit, and the ability of all this money that's out there that allows something like an open AI to stay private longer, or SpaceX, or pick your name.

7:35Do you see that continuing? Or tell me how you figure out whether that continues.

7:41Kelly Rodriques:The more participation there is in this market the more capital there is and so at Forge we see these two dynamics one is liquidity people want to sell their stock if a company's been private for 17 or 18 years and you work there for eight or ten or even if you were an early investor you have a fund that's got a tenured life or a duration you need to start providing liquidity so you can raise your next capital raise so there's a liquidity component to the market and then there's a capital raise and open ai raised 40 billion dollars privately this year think about that within the context of the ipo window and ask yourself this question if ai companies can raise that much money privately why are they going public uh spacex has managed to raise billions over the duration of their life Yeah.

8:36Kelly Rodriques:And so you're going to continue to see this as Schwab brings 42 million investors into this market and 12 trillion dollars. That capital is not just going to buy someone's shares. That capital will eventually find its way on balance sheets. So that's what you're going to see. So you're saying it increases it changes the supply and demand dynamic in your view. Absolutely. Because you're not relying just on selling shareholders. The Schwab investors that will have access to this, do they have to be accredited investors like have to have the rules like that accredited investors have? So so here's the interesting answer to that question.

9:13Kelly Rodriques:If you're buying on platform directly into a company or into a fund structure today, in a single name, you have to be accredited. However, in the next few weeks, we are launching, and this will obviously be part of Schwab, the first non-accredited index fund that's got 60 of the biggest private companies in AI, fintech, all the sectors at $2 ,500 minimums for non-accredited investors. So you can get a slice of the hottest names in the world through the Forge Megacorn Fund, which has been in existence for accrediteds and for QPs for a few years. But now we're making it available as a publicly listed fund that will be available in 2026.

9:59And any any rules in terms of moving in and out of it or how liquid will that be?

10:05Kelly Rodriques:It's going to probably have a quarterly liquidation option. It isn't it is an interval fund, so you'll be able to get in and out of it quarterly, but it will be available to everybody, every investor in the country. What allowed you to make that shift? Is it a regulatory change that allowed that? The regulatory environment allows for interval fund structures, but to actually pull it off, we acquired a really interesting company this last year called Equidity, whose mission was to build publicly available funds that hold privates. And they were able to structure the fund in such a way, using Forge's data to get through the regulatory requirements to make this a publicly listed fund.

10:49Kelly Rodriques:Now, you have to have access. So for this fund to be successful, we've got to have access to a lot of supply. And that's what I was answering earlier, Tim, to your question about, is it just selling shareholders? It will be some combination of selling shareholders as well as balance sheet capital. Kelly, great, great conversation. Thanks for staying up a little later over there in Davos and spending some time with us. We're going to have to get you back on in a little bit. That's Kelly Rodriguez, CEO of Forge Global, soon to be part of the Charles Schwab Corporation.

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