Secondary Markets
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Tuesday afternoon I was in the "Gulag," the warren of Venture Capital firms along Sand Hill Road, to attend SharePost's conference on "Market Issues & Opportunities for Private Companies." The conference room was packed and for good reason. The lack of IPOs over the past ten years has created a liquidity crisis: how do investors and entrepreneurs get some of their money out of their companies, many of whom are profitable enterprises? SharesPost, which was founded by Greg Brogger in early 2009, offers a solution: a private stock market for privately held shares where wealthy, accredited individuals can buy and trade shares held by Angels, VCs, and employees of startups. This secondary market has become controversial in several respects: -It is a private stock market that the public cannot participate in but it's the only way to buy stock in hot companies such as Facebook or Zynga.
Secondary Markets: Much Needed Liquidity For Silicon Valley Startups Or A Private Stock Market For The Rich? - SVW
Dick Costolo, 2010. By Kimberly White, Reuters. (Reuters) – Twitter Chief Executive Dick Costolo called secondary markets a distraction and expects private companies will increasingly enact policies to restrict the trading of its shares on those unregulated exchanges. Microblogging service Twitter, along with fellow red-hot social media companies Zynga and Facebook, have already had to put in place “lots of policies to constrain that,” Costolo told the audience at a Fortune conference in Aspen, Colo.
Twitter CEO Dick Costolo Calls Secondary Exchanges a ‘Distraction,’ Predicts More Companies Will Restrict Private Trades
Posted by Tom Foremski - March 28, 2011 Craig Mellow, at The Deal Magazine has a fascinating profile of Yuri Milner, the Russian investment banker who runs Digital Sky Technologies, a multi-billion dollar fund. Close connections (The Deal Magazine) Mr Milner has garnered tremendous amounts of publicity for his investments in Facebook, Groupon and other high flying US companies. These companies aren't public but their shares can be traded on private markets but only by individual investors and employees in the company, and prequalified private investors with a high net worth. These secondary markets have become larger over the past few years because there has been little demand for IPOs and they provide a capital exit for some shareholders.
How Yuri Milner Made Billions In The New Bubble - SVW
VC Interview: Bob Ackerman Warns On Secondary Market Excess - SVW
I spoke with Bob Ackerman , managing director of Allegis Capital and a veteran Silicon Valley venture capitalist about some of the trends and issues in VC. He spoke about his concerns about the secondary market, and that innovation in the US is being constrained by bad regulations, taxation and poor education. Here are some notes from our conversation: