Forge Global Holdings, Inc. (FRGE): PESTLE Analysis [Nov-2025 Updated]

You want to know where Forge Global Holdings, Inc. (FRGE) stands in late 2025, and the answer is counterintuitive: the tough economy is its biggest tailwind. While higher interest rates have slowed IPO exits, this lack of liquidity is pushing the estimated $5 trillion private market capitalization directly into Forge's secondary marketplace, creating a powerful, defintely clear opportunity. We're looking at a scenario where a 20% rise in secondary transaction volume could significantly boost their 2025 fee revenue, so let's break down the Political, Economic, Social, Technological, Legal, and Environmental factors driving this dynamic.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Political factors

SEC focus on private market transparency and investor protection

You're watching the Securities and Exchange Commission (SEC) closely because their moves directly impact the size of your market. The big shift in 2025 isn't about more restrictions; it's about expanding access for everyday investors, which is a huge opportunity for Forge Global Holdings, Inc. The SEC, under the new leadership, has signaled a clear intent to facilitate capital formation and allow greater retail investor participation in the private market.

The most significant action came with the issuance of Accounting and Disclosure Information (ADI) 2025-16 in the latter half of the year. This guidance fundamentally changed who can invest in certain registered closed-end funds (CE-FOPFs) that hold private assets. It eliminated the long-standing accredited investor qualification and removed the $\mathbf{\$25,000}$ minimum investment requirement for these funds. Plus, the previous $\mathbf{15\%}$ cap on a fund's exposure to private funds is gone. This opens the door for a wave of new, non-accredited capital to flow into the asset class that Forge serves.

To meet the inevitable demand for better risk management and disclosure that comes with retail access, Forge is already ahead of the curve. They launched Forge Price™, a derived dataset that brings greater transparency by tracking indicative price performance for approximately $\mathbf{200}$ venture-backed, pre-IPO companies, in partnership with Intercontinental Exchange, Inc. (ICE). That's the kind of data you need to make informed decisions in a market that used to be defintely opaque.

Potential for new regulatory clarity on secondary market trading rules

While the SEC is expanding access to the private market through registered funds, the rules governing the secondary trading of individual private company shares-Forge's core business-are still evolving. The SEC's Division of Examinations' 2026 priorities notably omitted a focus on trading in pre-IPO companies and private company shares in secondary markets, which suggests a temporary reprieve from immediate, targeted scrutiny. This is good for operational stability, but it doesn't mean the long-term regulatory picture is settled.

The ongoing discussion around tweaking the definition of an 'accredited investor' (Regulation D) and the shareholder count threshold for mandatory public reporting (Exchange Act 'held of record') remains a key political risk. If wealth thresholds climb, or new 'sophistication' tests are introduced, it could restrict the pool of direct buyers and sellers on Forge's platform. The current criteria are a net worth exceeding $\mathbf{\$1}$ million (excluding primary residence) or an income over $\mathbf{\$200,000}$ (or $\mathbf{\$300,000}$ jointly).

Geopolitical stability impacting global capital flows into U.S. private companies

Geopolitical instability is paradoxically driving more capital toward the U.S. market, even as it creates volatility. The ongoing tensions, particularly between the U.S. and China, are accelerating a global 'flight to safety.' This is why foreign demand for U.S. Treasuries surged in 2025, with net purchases by private and official investors exceeding $\mathbf{\$150}$ billion in June and $\mathbf{\$78.8}$ billion in July. This influx of capital indirectly supports the U.S. equity and growth sectors, which are the primary investors in the private companies traded on Forge.

However, the U.S. government's increased protectionist policies, including stricter application of Committee on Foreign Investment in the United States (CFIUS) regulations and the new 'Reverse CFIUS' regime, complicate cross-border investment. This scrutiny targets sensitive sectors like semiconductors, quantum information technologies, and artificial intelligence, all of which are major segments of the private market ecosystem.

Government incentive programs supporting venture capital and startups

The health of Forge Global's marketplace depends on a steady supply of high-growth private companies. Government incentive programs are a vital, non-dilutive source of funding for these companies, but their stability is a near-term concern. Specifically, the Congressional authority for the key Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs expired on $\mathbf{September 30, 2025}$.

If Congress doesn't reauthorize this, federal agencies may not be able to award funding, which would create a significant funding gap for early-stage, R&D-focused startups. This is a headwind for the venture capital ecosystem that feeds Forge's secondary market. Still, other programs offer a stable base:

• Small Business Administration (SBA) loan programs, like the 7(a) and 504 loans, continue to provide tailored financial solutions.
• The federal and state Research and Development (R&D) Tax Credits remain a major incentive, with some states like California offering up to $\mathbf{15\%}$ back on research costs.
• The New Markets Tax Credit (NMTC) program encourages private investment in underserved communities, fostering new opportunities.

The immediate action point is watching Congress on SBIR/STTR. If they stall, the pipeline of federally-backed, innovative companies will shrink. That's a political risk that translates directly to less inventory for the secondary market.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Economic factors

Higher interest rates slowing IPO exits and increasing demand for secondary liquidity.

The persistent high-interest-rate environment, a deliberate tool to combat inflation, has fundamentally reshaped the exit landscape for private companies, which is a core driver for Forge Global Holdings' business. When the cost of capital is high, Initial Public Offerings (IPOs) become less attractive, and M&A activity slows down, creating a significant backlog of mature, private companies. This backlog is a direct opportunity for Forge Global Holdings.

The slowdown in traditional exits has made the secondary market the primary source of liquidity for Limited Partners (LPs) and General Partners (GPs) looking to return cash. The global secondary market is projected to be a record year in 2025, with transaction volume estimated to reach approximately $230 billion, driven by the need for cash distributions. This macro trend directly fueled Forge Global Holdings' platform, where trading volume in Q1 2025 surged 132% quarter-over-quarter to nearly $692.4 million, and then rose again in Q2 2025 to a total of $756.1 million, an increase of 77% over the prior year quarter.

This economic reality translates into a strong tailwind for secondary platforms:

• Slower IPOs mean companies stay private longer, increasing the need for secondary trading.
• Institutional investors are using secondary sales as an integral part of sophisticated liquidity-management strategies.
• The median age of VC-backed companies at IPO has increased from 6 years in 2000 to 14 years in 2024, extending the window for private market transactions.

Private market capitalization estimated to exceed $5 trillion by late 2025.

The sheer scale of the private market provides a massive, growing addressable market for Forge Global Holdings. While the specific private equity market alone was projected to reach $9.1 trillion by 2025, and global private asset funds were valued at $12.9 trillion as of March 2025, the underlying private market capitalization that requires liquidity solutions is defintely well over the $5 trillion mark cited in many industry reports for specific segments.

This massive pool of capital is increasingly turning to structured liquidity solutions like Single Purpose Vehicles (SPVs), which Forge Global Holdings facilitates. The company reported that its SPV Assets Under Management (AUM) reached $1 billion in Q1 2025, demonstrating how they are capturing value from this enormous, growing asset class. The trend is clear: private markets are no longer a niche alternative but a foundational component of long-term portfolio construction.

Inflationary pressure increasing operating costs for technology platforms like Forge.

Even as Forge Global Holdings benefits from the macro-economic shift toward secondary liquidity, it still faces the challenge of persistent inflationary pressure, particularly in labor and technology costs. For a technology-driven platform, the cost of talent, especially engineers and data scientists, remains elevated, and this is a key component of operating expenses.

Here's the quick math on Forge Global Holdings' cost structure in the first half of 2025:

While the company's total operating expenses for the first half of 2025 were slightly lower at $82.0 million compared to $83.9 million in H1 2024, the high base of these costs, combined with the need for continuous investment in technology and compliance, means the platform must keep scaling revenue aggressively just to outrun underlying cost inflation. The Adjusted EBITDA loss for H1 2025 was still $14.3 million, showing the cost-to-revenue gap remains substantial.

Volatility in public market valuations impacting private company mark-to-market.

The public market is the ultimate exit for most private companies, so its volatility directly impacts the valuation of private assets (mark-to-market). When public market valuations, especially in the technology sector, experience a sell-off or correction, it creates downward pressure on comparable private company valuations.

The IPO market saw a 'freeze' earlier in 2025 due to market volatility, which reinforces the connection. This volatility forces private fund managers to be more conservative in their valuations, which can slow down secondary market activity if buyers and sellers cannot agree on a price, widening the bid-ask spread. What this estimate hides is that while private markets generally offer protection against this volatility, they are not completely decoupled. The correction risk is particularly notable in sectors like Artificial Intelligence (AI), which saw a run-up in valuations in Q1 2025, followed by a correction, making the valuation process for Forge Global Holdings' data and trading services more complex.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Social factors

You're looking at the social factors influencing Forge Global Holdings, Inc. (FRGE), and what you see is a powerful, two-sided coin: a massive, democratizing appetite for private assets, but also a lingering perception of exclusivity and risk. This social shift is defintely the tailwind pushing Forge's business model, but it also dictates their communication strategy. The key takeaway is that the retail and institutional worlds are converging on private markets, and Forge is a critical bridge.

Growing demand from retail investors for access to high-growth pre-IPO assets.

The days when pre-IPO (Initial Public Offering) assets were strictly for the Wall Street elite are ending. Retail investors now own the largest single block of Forge Global Holdings stock, possessing a 45% stake in the company as of October 2025. This ownership structure itself reflects the broader social demand for access to high-growth private companies like OpenAI and SpaceX, which Forge lists on its platform.

This trend is so strong that it's driving major corporate strategy. Charles Schwab's November 2025 agreement to acquire Forge Global Holdings, valued at roughly $660 million, is a concrete move to capitalize on this rising retail demand. Schwab's new Alternative Investments Select platform, which leverages Forge's access, is aimed at retail clients with more than $5 million in household assets, showing that while the gate is opening, it still has a velvet rope. Looking ahead, 55% of industry executives believe that at least half of private markets fundraising will flow through semi-liquid, retail-style vehicles within the next two years, proving this is a structural, not cyclical, shift.

Increased employee desire for liquidity options for private stock holdings.

For employees at high-growth private companies-your engineers, product managers, and early executives-their company stock is often their largest, yet most illiquid, asset. This creates a real social and financial pressure point, especially as companies stay private longer. Forge's core value proposition addresses this directly by providing a secondary market.

The most popular solution for this is the use of Single Purpose Vehicles (SPVs), which are essentially funds set up to buy shares from a pool of sellers. The total assets under management (AUM) in these SPV structures on Forge's platform reached $1 billion in Q1 2025. That $1 billion represents thousands of employees and early investors getting much-needed cash liquidity without forcing a premature IPO. It's a huge social benefit for the startup ecosystem, helping companies retain talent by offering a partial, mid-cycle exit.

Shift in institutional investor allocation toward private equity and venture capital.

It's not just retail; the professional money is also moving. Institutional investors, like pension funds and endowments, are consistently increasing their exposure to private markets for diversification and higher potential returns. Globally, private markets assets now account for 11.5% of institutional investor portfolios, a jump from 10.5% in the prior year. This is a significant, sticky allocation change.

Over the next five years, a substantial 66% of institutional investors plan to increase their private asset allocations. In the near-term, 30% of Limited Partners (LPs) plan to increase their private equity allocations in the next 12 months. This institutional conviction provides a deep, reliable pool of buyers for the shares traded on the Forge platform, which is critical for market stability. Institutions already own a respectable 37% stake in Forge Global Holdings itself, showing their belief in the infrastructure of the private market.

Public perception of private markets as an exclusive, high-risk investment class.

The perception of private markets is slowly changing, but the 'exclusive, high-risk' label still sticks. This is a challenge Forge must manage. The high-risk perception is grounded in reality: private shares are highly illiquid, and Forge's own stock has been volatile, down 96.71% from its all-time high in 2022, though it did surge over 139% month-to-date in November 2025 on acquisition news. This volatility is a social hurdle, as it reinforces the idea that only those who can afford to lose money should play in this space.

To combat the exclusivity perception, Forge's role is to educate and simplify the process, which is why their strategy includes expanding data access through partnerships. The goal is to make the private market feel less like a closed-door club. The move toward 'democratization' is real, but until the minimum investment thresholds drop significantly below the $5 million level seen in new retail offerings, the market will still be viewed as exclusive to the ultra-wealthy.

• Educate on illiquidity risk.
• Simplify complex SPV structures.
• Showcase data to build transparency.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Technological factors

The private market is defintely a technology-first business now, and for Forge Global Holdings, Inc. (FRGE), technology is both the core product and a major operational expense. Your competitive edge here hinges entirely on how fast you can integrate new tools like AI and how well you can defend your platform.

Adoption of Distributed Ledger Technology (DLT) to streamline private share transfers.

While Forge Global does not publicly confirm a full-scale DLT (blockchain) adoption for its core private share transfer process in 2025, the technology is a critical factor in the broader private market. The company's focus remains on its proprietary marketplace infrastructure and the Next Generation Platform, which is built on a modern API-native architecture to enhance competitive advantage.

The marketplace's current challenge isn't just technology, but the legal and corporate hurdles-like company board approval and rights of first refusal (ROFR)-which DLT alone can't bypass. Still, the rise of blockchain infrastructure companies, which are highly in-demand on Forge's own platform, shows the underlying trend. For example, investor appetite for companies involved in blockchain infrastructure was strong in Q1 2025, with companies like Ripple, a firm with a $10.94 billion valuation as of March 27, 2025, attracting high investor demand on the Forge marketplace.

Need for continuous investment in cybersecurity to protect high-value client data.

The risk from cyber threats is rising, especially with the malicious use of generative AI, and Forge must continuously invest to protect its high-value data on private companies and investors. You can see this pressure in the market: the global AI in cybersecurity market is projected to reach $34.10 billion in 2025.

For Forge, technology costs are a significant part of the operational structure. In the first nine months of 2025, the company reported a $1.2 million impairment of noncancelable service contracts in technology and communications, which reflects the high cost and rapid obsolescence of tech infrastructure. Plus, the firm is offsetting costs by increasing its reliance on offshore third-party software engineers, which is a common strategy but adds a layer of complexity to data security and compliance.

Competition from new digital platforms offering fractionalized private market access.

The democratization of private markets through fractionalization (breaking down high-value assets into smaller, accessible shares) is a major competitive headwind. New digital platforms are making private assets accessible to a much broader audience, which directly challenges Forge's traditional institutional and high-net-worth focus.

The trend is clear and fast:

• Retail investor allocation to private markets is projected to grow from $0.1 trillion in 2024 to $2.4 trillion by 2030, a massive 76.2% Compound Annual Growth Rate (CAGR).
• Some platforms allow investments to start as low as $50.
• Institutional investor transaction volumes in fractional assets rose 43% in Q1 2025 alone.

Forge must use its Next Generation Platform to offer competitive fractionalized products, like its Forge Accuidity Private Market Index (FAPMI), to capture this retail and smaller institutional demand.

AI/Machine Learning used for better price discovery and matching efficiency.

AI and Machine Learning (ML) are not just buzzwords; they are the engine for better price discovery in the opaque private market. Forge's proprietary pricing model, Forge Price™, is a key technology asset that leverages data from primary funding rounds and secondary market transactions, including indications of interest (IOIs), for approximately 200 private growth stocks.

This data-driven approach gives Forge a significant advantage, particularly in the red-hot AI sector. Here's the quick math: Forge's internal AI thematic basket of private companies posted a stunning +63.1% Year-to-Date (YTD) return as of July 2025, which dramatically outperformed public AI benchmarks like the AIQ ETF, which only saw a +13.2% YTD return. That's the power of data and a smart algorithm.

The ability to accurately price illiquid assets is the whole game.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Legal factors

Ongoing Scrutiny of 'Accredited Investor' Definitions by the SEC

You know that Forge Global Holdings, Inc. (Forge) operates a marketplace exclusively for accredited investors, so any change to that definition is a direct threat or opportunity. The Securities and Exchange Commission (SEC) and Congress are defintely in motion on this in 2025, which matters for your potential investor pool.

The House of Representatives passed the "Equal Opportunity for All Investors Act of 2025" (H.R. 3339) on July 21, 2025, which aims to create an alternative, non-wealth-based path to accreditation. This path involves passing a certification exam established by the SEC and administered by FINRA, which would test an individual's financial sophistication. If this bill passes the Senate, it could significantly expand the number of eligible investors for Forge's platform, potentially boosting transaction volume. Conversely, the regulatory burden of verifying these new, non-traditional accreditations will increase compliance complexity. The current wealth thresholds remain at a net worth of over $1 million (excluding a primary residence) or an annual income exceeding $200,000 ($300,000 with a spouse).

• House passed H.R. 3339 on July 21, 2025.
• New path via FINRA-administered certification exam.
• SEC also considering adding entities like LLCs with over $5 million in assets.

Complex State-by-State Blue Sky Laws for Private Securities Transactions

While federal exemptions under Regulation D (like Rule 506) preempt state registration requirements, you still have to comply with state 'blue sky' laws for notice filings and anti-fraud provisions. This isn't a simple one-and-done filing.

Forge, as a platform facilitating private resales, must ensure that all transactions maintain their exemption from registration under the Securities Act of 1933. The SEC is serious about these technical compliance failures, even without fraud. For example, in late 2024, the SEC settled three enforcement actions against companies solely for failing to timely file their Form D notice of sales. The consequence? Those companies are now prohibited from relying on Regulation D exemptions in the future without an SEC waiver. This risk forces a multi-state compliance framework, adding legal overhead that scales with the number of states where investors reside or where the offering takes place. It's a logistical headache that requires constant vigilance.

Risk of Litigation Regarding Valuation Methodologies for Illiquid Assets

The core of Forge's business involves illiquid private company securities, and where there is illiquidity, there is valuation subjectivity, and where there is subjectivity, there is litigation risk.

Regulators like the UK's Financial Conduct Authority (FCA) highlighted in March 2025 that the lack of a consistent valuation standard across private markets creates scope for conflicts of interest, inconsistency, and potential asset misvaluations. This is a global theme, and the SEC is watching. As private equity pushes more into retail and wealth channels, the risk of class-action lawsuits from individual investors over opaque fees and manipulable valuations rises significantly. Forge's role in providing data and a trading platform makes it a central party in any dispute over a private asset's 'fair value.'

Here is a snapshot of the valuation risk environment in 2025:

Compliance Costs Rising Due to Stricter Anti-Money Laundering (AML) and Know Your Customer (KYC) Rules

Every financial firm, especially one dealing with private, high-value transactions, is facing a compliance cost crunch. Forge's status as a registered broker-dealer (Forge Securities) and an investment adviser (Forge Global Advisors) means it is directly subject to the full weight of SEC and FINRA rules, including stringent AML and KYC requirements.

You can see the magnitude of the operational lift in the financial statements. For the nine months ended September 30, 2024, Forge's total operating expenses were $123,946 thousand. A significant portion of this, embedded within compensation and benefits, and general and administrative expenses, is dedicated to the compliance function: hiring specialized staff, implementing new RegTech (Regulatory Technology) software, and conducting enhanced due diligence on every accredited investor and private company shareholder. The regulatory environment demands a perfect record, and even a minor slip in verifying a customer's source of funds can lead to substantial fines, so the investment in compliance is non-negotiable.

This is not a discretionary expense; it's the cost of staying in business.

Forge Global Holdings, Inc. (FRGE) - PESTLE Analysis: Environmental factors

The big takeaway is that while the economic environment is tough-fewer IPOs mean fewer exits-it actually drives demand for Forge's core service: secondary liquidity. That's a powerful counter-cyclical dynamic.

Your next step should be to model how a 20% increase in secondary transaction volume, driven by the lack of IPOs, impacts Forge's 2025 estimated transaction fee revenue.

Increasing investor demand for Environmental, Social, and Governance (ESG) disclosures from private companies.

You are seeing a fundamental shift where Environmental, Social, and Governance (ESG) is no longer a niche, but a core due diligence requirement for institutional money. By late 2025, the pressure on private companies to disclose ESG data is immense, driven by regulatory changes like the EU's Corporate Sustainability Reporting Directive (CSRD) and the US Securities and Exchange Commission (SEC) climate disclosure rules, even if those rules primarily target public companies first. This regulatory push trickles down fast, because the institutions investing on Forge's platform-the Limited Partners (LPs)-are themselves mandated to report on their portfolio's sustainability risks.

Honesty, if you want to attract capital from major LPs, you need an ESG story, defintely.

The data shows this isn't a trend; it's a mandate. For instance, a striking 89% of investors now factor ESG into their investment decisions. The European private markets alone are forecasted to hold between EUR 775.7 billion and EUR 1.2 trillion in ESG-focused assets under management (AUM) by the end of 2025. This capital pool is actively seeking private assets that can provide auditable ESG metrics.

Need to integrate ESG data points into private company due diligence processes.

The core opportunity for Forge Global is to become the conduit for this mandatory ESG data flow in the secondary market. Right now, private company ESG data is fragmented and often unaudited, which is a big problem when institutional investors need standardized, comparable metrics. Forge's platform, which already aggregates private company data for valuation and trading, is perfectly positioned to integrate and standardize ESG data points from the private companies listed on its marketplace.

• Standardize non-financial disclosures for LPs.
• Embed climate risk assessment into trading data.
• Verify ESG claims to reduce greenwashing risk.

Integrating this data into the due diligence process on the platform helps both the buyer and the seller. For a buyer, it reduces their regulatory and reputational risk. For a seller, a private company with strong, verified ESG data can command a premium or, at least, ensure a faster, smoother transaction process.

Pressure on financial platforms to report on their own operational carbon footprint.

As a financial technology company, Forge Global's direct environmental impact is minimal, primarily relating to its facilities and cloud computing infrastructure-Scope 1 and 2 emissions are low. However, the indirect pressure-Scope 3 emissions-is rising, especially from large, climate-conscious clients. While Forge Global's investor relations mentions a commitment to 'paperless and eco-conscious work practices,' specific, auditable carbon footprint numbers for the platform itself are not publicly disclosed.

To be fair, the industry is still figuring out how to measure the 'digital' carbon footprint precisely. For example, some blockchain-based financial instruments have been assessed to have a lifecycle carbon footprint of only 0.82 kg CO2 per digital bond, which sets a low bar for digital finance platforms. Forge will face increasing demand for transparency on its cloud provider's energy mix and its own energy efficiency to satisfy the rigorous reporting requirements of its largest institutional clients.

Minimal direct operational environmental impact, but indirect pressure via client mandates.

Forge Global's environmental risk is less about compliance with pollution laws and more about its ability to facilitate its clients' compliance. The platform is a marketplace, not a manufacturer. Its environmental impact is indirect, but its strategic opportunity is huge.

Here's the quick math on the opportunity you asked for:

Here's the quick math: We estimate a full-year 2025 Trading Volume of $2.8 billion, based on the 1H 2025 volume of $1.4 billion. A 20% increase in that volume, driven by market illiquidity, adds $560 million in trading. Applying the Q2 2025 Net Take Rate of 2.4% to that additional volume generates an extra $13.44 million in transaction fee revenue. This calculation shows the value of being a counter-cyclical liquidity provider, plus it highlights the need for the platform to integrate the ESG data that will be required to unlock that capital.