If there’s one tech scenester not worried about Mark Zuckerberg taking his sweet time to IPO, it’s probably New York’s Barry Silbert. That’s because dotcom bubble déjà vu at the Palo Alto headquarters tends to translate into more business for SecondMarket, Silbert’s online exchange for shares in private companies.
Last year, Facebook shares from early employees (before Zuck limited equity to restricted stock that can only be sold after the company goes public) accounted for nearly 45 percent of all trades on SecondMarket. Today, the New York Times reports, about 100 early employees have left the company, in many cases opting to cash out while valuations are still stratosherpic. “If you’ve seen the world blow up once, you just don’t know what’s going to happen a year from now,” an anonymous former Facebook employee told the Times.
In other cases, shares are sold to pay-off the hefty tax bills. Typically, early employees who leave private start-ups have 90 days to exercise their stock options. “An employee who exercises $10 million in shares may face some $3 million in taxes, and in many cases the only way the employee can pay those taxes is by selling some shares,” the paper explains.
But even the disruptors aren’t safe from disruption. 137 Ventures, a new San Francisco-based fund expected to file regulatory forms today to raise $35 million from institutional investors, wants to lend money to start-up employees willing to put up their shares as collateral. A middle ground for those who still feel bullish about valuations, but also want to explore those feelings from a scenic Palo Alto cottage. Your move, Silbert.