(Bloomberg) -- Nasdaq Private Market LLC is publicly launching a proprietary pricing product for private companies, joining an increasingly competitive space for data on potential IPO candidates.
For the past month, privately-held NPM has been showing off a product called Tape D to its own investors – Wall Street’s biggest banks. Now, the firm is unveiling its offering more broadly with a public launch on Thursday.
With companies like SpaceX and Stripe able to achieve eye-popping valuations without selling a single share in the public markets, providers like NPM and its rivals are competing to establish their products as the go-to reference.
“It’s already a $3.5 trillion asset class. There’s already more capital raised each year in the Reg D than in the public markets,” NPM Chief Executive Officer Tom Callahan said, referencing the US Securities and Exchange Commission’s regulation that allows private companies to sell shares without registering. Tape D is meant to empower investors and “decrease the information asymmetry” that persists in the private market, Callahan said in an interview.
“One of the challenges that absolutely needs to be solved in today’s market and in tomorrow’s market is information – fairness and equal access to information,” Callahan said.
Tape D uses a multi-factor algorithm to pull data from historical trades as well as a pool of sources including from 1.7 million deal terms extracted from regulatory documents and filings. The data includes more than 30 years of database information from VC Experts, which NPM acquired in 2022.
Some private companies may frown on valuation estimates that they haven’t announced themselves. But Callahan said Tape D will offer such companies a clearer picture of their cost of equity capital and insights into when shares may be trading at a premium, providing them with near real-time opportunities to raise capital.
“All of that information they would pay an investment banker for, they can get from our data products,” Callahan said. “Everything that we’re showing here is public data, there’s no private information. All we’re doing is aggregating what’s out there,” he said.
Public company listings in the US have been declining since the late 1990s, falling from over 7,000 to below 4,000 at the end of the second quarter, data from the Center for Research in Security Prices show. Private firms make up an increasingly large share of corporate financings as firms take longer to list on the public markets – typically 15 years from their launch – and the number of private firms worth over $1 billion has risen in recent years.
That is driving the appetite for private share trading, as employees and others look for liquidity. Providers have been pushing into the space, with CBOE Global Markets Inc. becoming the latest, saying in September it would launch a private markets trading platform.
Since NPM’s inception in 2013, the firm has executed more than $55 billion in transactions, Callahan said. Hence the opportunity for Tape D. “What do the capital markets look like a decade from now? We’re going to have far fewer public companies and we’re going to have more unicorns,” he said.
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