One of the most interesting and tectonic shifts in the world of tech start-ups has been the emergence of robust markets for buying and selling private shares.
The SEC’s announcement last week that it is was considering relaxing the rules around private shares was met with strong reaction from the VC community.
New York investor Roger Ehrenberg penned a post this morning for Fortune arguing that the private markets were in need of some rationality.
News broke this morning that the SEC is thinking about relaxing the limit that keeps private companies from having more than 500 shareholders. It’s a move that would reshape the tech world, making it possible for companies to significantly delay their IPOs by relying on a broad pool of wealthy individuals to provide them capital to grow. It’s troubling as well, since it would mean more small investors putting money into firms that don’t make their financials public.
“Just because you can afford a car, doesn’t mean you know how to drive one,” quipped Larry Lenihan, CEO of First Mark Capital and a board member at SecondMarket, in a call this morning.