SecondMarket was having a pretty good week. On Tuesday came a flurry of articles about the startup’s crowdfunding-flavored partnership with Angellist, and just yesterday, CEO Barry Silbert announced that Tennessee’s First Advantage Bank was using the service to go private while remaining open to investors. He called the move “validation of our model.”
SecondMarket’s first quarter private company report just dropped, offering some insight into which private companies are preoccupying not just us ink-stained tech writers, but secondary market investors. So who’s the belle of the ball? Everyone’s still riveted by Facebook, but Pinterest and Warby Parker are on the rise. Plus, we hate to disappoint Dumbo, but that particular tech alley needs a new name. Read More
Last year’s booming secondary market is this year’s existential question: for SharesPost and Second Market, is there life after Facebook? Both companies, which grew quickly along with the private market demand for Facebook shares, are dealing with revenue losses now that Facebook is no longer trading privately. Read More
SEC’s Yearlong Secondary Markets Investigation Reportedly Yields Charges Against SharesPost and Felix Investments [UPDATED]
It looks like the Securities and Exchange Commission’s yearlong investigation into trading private shares on the secondary market may finally be coming to a close.
Yesterday afternoon, Bloomberg first reported that the SEC is preparing to bring civil charges against Felix Investments, a Wall Street broker-dealer perhaps best-known for its twin funds Facie Libre 1 and Facie Libre II–meaning face book in Latin. “The firm is expected to be accused of violating securities laws related to soliciting investors,” DealBook wrote in a follow-up, adding that Felix “aggressively accumulated” and actively promoted shares of companies like Facebook and Twitter, going as far as to cold-call Facebook employees to try to get them to sell.
The SEC is also reportedly “nearing a settlement” with SharesPost, an online platform for selling private shares. “Regulators had expressed concern that SharesPost was not registered as a broker-dealer when it began facilitating trades in private company shares in 2009,” noted DealBook. SecondMarket, a SharesPost competitor which registered as a broker-dealer early in its history, however, “is not the subject of an SEC inquiry,” spokesman Mark Murphy told Betabeat. Read More
In SecondMarket’s 2011 year-end report, Facebook beat out Twitter, Foursquare, Gilt Groupe, Hulu, Spotify, and more as the trading platform’s number one most-watched company. Facebook has 14,973 “watchers,” almost double the next-closest, Twitter at 7,854. More tellingly, according to public statements from CEO Barry Silbert, 30 percent of SecondMarket’s revenue came from trading private shares of Facebook stock, which will soon become a province of the public markets.
But to hear Mr. Silbert tell it, he’s coping with the loss just fine. After all, it’s not like they didn’t know this was coming. As Crain’s reports, on Wednesday, Mr. Silbert told the audience at an Xconomy forum on New York’s venture capital scene, “We’re completely prepared to fill the hole,” adding, “We’re hiring, and we have a lot of capital.” Read More
SecondMarket is most popularly known as a private company equity exchange and indeed, the startup’s fastest-growing business consists of private company stock sales. That would be the Facebook and Twitter and other pre-IPO share shuffling that happens before a company goes public. And of course, a lot of demand is in tech (although PIMCO has traded on SecondMarket before, as has SecondMarket).
But a report out this month reminds us that one of SecondMarket’s most important and perhaps unexpected services involves transactions related to bankruptcy. SecondMarket compiles data about bankruptcy asset transactions and calculated that bankruptcy claims slowed in October.
The company doesn’t say how much revenue comes from bankruptcy claims, but it says the bulk of its revenue comes from fixed income securities such as debt instruments and asset-backed securities. Bloomberg reported that SecondMarket did $400 million in private company shares in 2010 and is on track to do $1 billion. Read More
There’s a reason eating your own dogfood is such a successful marketing ploy. It shows you trust your product. Lucky for SecondMarket’s Barry Silbert, his little experiment also netted his shareholders and emplyees $13 million in interim liquidity.
You see a few weeks, Mr. Silbert began selling SecondMarket shares on SecondMarket. Read More
On his blog New York Summer, HackNY fellow Akarshan Kumar has been thoughtfully posting about all the tech luminaries that come to influence young minds towards the start-up life and away from Wall Street. The latest lecture notes come from SecondMarket founder Barry Silbert, a former banker himself.
Using examples like the decreasing rate of IPOs over the past decade, the flash crash last May, the impact of high-frequency traders, and the decreasing average holding period of stock (down to just 2.8 months), Mr. Kumar says, “Silbert claimed that the public markets are broken, probably even beyond repair, and that the future lies in private markets.” Read More
SecondMarket just released its second-quarter report from 2011 and by the looks of things, secondary market investors are as frothy-in-the-mouth as public ones. In the first half of the year, the online platform completed $268 million in private company stock transactions, a 75 percent year-over-year increase from the first half of last year. Considering SecondMarket typically takes a three to five percent fee, a back of the envelope calculation means that brought in about $8 million to $13.4 million in gross revenue from those trades. Although SecondMarket’s Girl Friday, Aishwarya Iyer told Betabeat, the that percentage is very general. “It depends on the amount of leg-work required, and numerous other factors.”
As is befitting the current boom, in the second quarter, consumer web and social media companies, representing 87.3 percent of transactions, thoroughly trouncing business products and services with 7.3 percent of transactions and retail and commerce with just 5.1 percent.
So who are the buyers aggravating pre-IPO founders by trolling SecondMarket for shares and driving up valuations? Zuck can blame accredited investors, who bought 46.7 percent of the dollar amount of transactions, hedge funds with 22.2 percent, and asset managers with 14.7 percent. (VC funds were responsible for a scant 0.2 percent of the dollar amount.) Read More
New York City-based Felix Investments is suing SecondMarket in the New York Supreme Court over a $2,475,000 deal for Facebook shares that never came to fruition. Felix began investing in Facebook back in 2009 through two funds named Facie Libre 1 and Facie Libre II–meaning face book in Latin–and did a brisk business with SecondMarket. Dealbook’s Evelyn Rusli recently described Felix investors as “not part of Silicon Valley’s elite” and “more comfortable navigating the narrow streets of Lower Manhattan than on tree-lined Sand Hill Road in Menlo Park.” The suit is over a deal in January 2010 to buy 75,000 shares from Karl Voskuil, a Facebook software engineer, at $33 per share. Read More