Gate Technologies is looking to shake things up in the booming field of secondary markets,announcing the acquisition of Infoexchange yesterday.
Companies like Sharepost and SecondMarket, Gate’s most well known New York competitor, rely on privately managed auctions, brokerages and trading specialists to set prices and transact the share of tech companies like Facebook.
Gate is attempting to build an end-to-end electronic trading platform that will provide customers with neutral research and a more liquid market.
“We fundamentally believe that in the end, this will provide better price discovery, and thus better opportunity for everyone,” Gate CEO Vince Molinari told The Observer. “We’re taking it out of the backroom where brokers get phone calls and giving the buyers and sellers a platform to negotiate without a middleman, so the power goes to the participants.”
Of course, price discovery may not be in the interest of some of the high flying tech companies like Facebook, Zynga and LinkedIn. Facebook’s shares trade on secondary markets like Sharepost far above the valuation given by the recent Goldman Sachs investment.
“Absolutely for companies like Facebook and Twitter, the outliers, this private model may work fine” says Molinari. “But I think there is a paradigm shift in the way private companies are looking to raise capital. Smaller, less well know firms will benefit from our more liquid, more transparent marketplace.”
Gate recently sent a proposal to the SEC pushing for changes to the current rules that allow no more than 500 shareholders in a private company.
Several more acquisitions will be announced by Gate in the coming months, according to a source close to the company, as the market for private shares of technology companies continues to heat up.
bpopper [at] observer.com | @benpopper