So the concentrations improved, but is there exposure to further cash sorting? I mean I don’t think we can kind of put a forecast on that. Something that we watch very closely. I think as Kelly indicated, the key for us is going to be focused on growing the custody business, adding new accounts, and that’s the way we’re going to continue to improve the business at our custodian.
Devin Ryan: Okay. Great. Thanks guys. I appreciate it. I’ll leave it there.
Kelly Rodriques: Thanks, Devin.
Operator: And your next question comes from the line of Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Good afternoon, and thank you for taking my question. Could you please provide a little bit more color on the trading volume in October so far? I understand that you may not want to talk about a specific number, but what’s your expectation of the fourth quarter trading volume compared to the third quarter? Would that be flat, down or up a little bit? Thanks.
Mark Lee: Hey, Owen, this is Mark. If you recall, I think in the last two quarterly earnings calls, we were comfortable making comments. While we don’t provide guidance, we were comfortable making comments about kind of the coming quarter, right? And as you recall, the third quarter historically has been a slow quarter for us when you look at patterns throughout a year. Typically, the summer months are a time when volume slows down. But as you can kind of see, in fact, trading volume increased significantly and in Q3. And you guys follow this stuff very closely, but obviously, the public markets performed very strongly in the first half. I think the main indices, S&P, Nasdaq and the Russell, hit their peaks in July. And we saw that momentum kind of carrying into the private markets.
But of course, post Labor Day, as Kelly mentioned, with the Fed’s discussion of higher rates for longer, with the war breaking out in October, it’s as Kelly said, it’s this balance of positive indicators in terms of IOIs and buy-side interest. And yet, we’re very aware of the tenuous macroeconomic environment and kind of what’s happened to public markets in September and October, right? And so two other things that I would mention, Owen, that we also watch very closely, and we’ve indicated are important factors in the return of the private market and probably talks about the grade reset. One is kind of the funding round activity that we see for private companies. This is information that you can see in our Forge Investment Outlook. But in Q3, roughly 6% of the companies that we track, and there’s about 1,700 companies that we track for this, about 6% of those companies raised capital in Q3, about 18% of the companies that we track on a year-to-date basis.
So while that’s positive, it’s still the minority. It says that still over 80% of the companies we track have not raised a new round in 2023. There’s data in the FIO that shows that now the time between funding rounds has increased to 21 months, and so many companies are still kind of waiting to raise the next round. Those that do raise capital are those that can raise capital at a premium, with an average of a 20% premium over the last round. And then IPOs, right? There’s been a number of IPOs that you’ve seen recently, with kind of a mixture of results. I think we believe that the great reset and kind of the return of the IPO market are also important drivers because they’re particularly important to the private markets to show that companies can have successful exits and that private companies start to go through the great reset, and those primary funding rounds are an important part of price discovery, right?
They give investors high confidence that valuations have kind of reset. So those are some of the other factors that I think we watch closely. And hopefully, that’s helpful.
Owen Lau: Got it. And then maybe go to another theme, which is your longer-term trend. Could you please give us an update on your international strategy? Thanks.
Kelly Rodriques: Yeah. So we previously announced that we do have our [indiscernible] application in, and we’ve been building the European team and are optimistic about our ability to begin trading in 2024. I’d say that we believe that the European market possesses a great deal of opportunity for us. And it’s probably five years behind the US market as we think about volumes. But I was recently there, and we probably had three or four of the senior team out in Berlin in the last 90 days. And the level of receptivity that we’re getting, both at the issuer level and at the venture capital community within the regions that we’re operating, has been really refreshing. I’d say there’s a real welcome attitude for Forge in Europe. I think the attitudes about liquidity and about giving the flexibility to investors and venture capitalists to sell their position before an IPO has been a message that we’ve received and been trying to get a sense for since we started staffing there.
And we’ve really got a team of people there that are staffed up in the last six months that have really proven our ability to attain and retain really great talent in the region. So there’s a lot of reasons for us to be excited about it, and we’re expecting revenue contributions in 2024. I don’t know, would you add anything, Mark?
Mark Lee: No. It’s just very, very excited about the opportunity in Europe, Owen, I mean, very much kind of being first movers on the continent, right, so — and in the UK.
Owen Lau: Got it. Thank you very much.
Operator: And your next question comes from the line of Jeff Schmitt with William Blair. Your line is open.
Jeff Schmitt: Hi, good evening. Are you seeing any competitive pressures on take rates, just given that transaction volumes remain below historical levels? I know you mentioned the block trade sort of brought the rate down, but just curious what your read is on the competitive environment.
