Secondary Market for Buying and Selling Private Company Stock and Employee Stock Options

Private Company Stock

Market Description

SecondMarket's Private Company Market facilitates transactions in both debt and equity securities in a wide variety of dynamic, high growth private companies. By some accounts, up to $200 billion has been invested in private companies by venture capital funds and angel investors over the past 5 years. The lack of a functioning IPO market and minimal M&A activity have left shareholders with few options for liquidity in these investments. Moreover, systemic problems facing companies wanting to go public, including lack of research sponsorship, requirements stemming from Sarbanes Oxley, etc., compound the problem of an IPO as an exit strategy. For those companies seeking to stay private, administrative burdens surrounding shareholder management and communication add to the pressing need for liquidity.

Through SecondMarket, private companies have the ability to opt-in to an organized and controlled private marketplace environment. This platform enables early investors and employee shareholders of private companies to exit their investments in cooperation with company management. SecondMarket affords companies with a set of robust tools, allowing streamlined shareholder communication and access to SecondMarket's market participants.

Dec 23 2009

Bad Year, Better Future — www.portfolio.com

Venture capital firms had a tough time raising money and cashing in on portfolio companies this year, but they expect the picture to improve in 2010
The third quarter was the worst for VC fundraising since 2003, but the IPO scene is picking up with at least 11 companies going public so far this year, with three in the third quarter alone
Although some 90 percent of VCs expect their industry to contract in 2010 according to the National Venture Capital Association (NVCA), 74 percent predict that more than 20 venture-backed companies will conduct IPOs next year, with the average forecast of 26 IPOs, which would likely double 2009’s final tally

Dec 22 2009

Strategies For Finding Venture Capital In 2010 — blogs.wsj.com

Entrepreneurs seeking venture funding in 2010 need to be aware of the conditions currently facing VC firms, and adjust their strategies accordingly
“Institutional portfolio gains are down overall, credit is tight and risk-adverse everywhere, and the VCs’ restrictions on their own new investments in the last three to four quarters has reduced their ROI”
Given the pressures of the market, entrepreneurs “must do their homework”
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Dec 18 2009

When Digital Sky Comes Calling, Why Even Bother With An IPO? — blogs.wsj.com

A relatively new late-stage Russian investment firm, Digital Sky Technologies, is helping top venture-backed internet companies dispense with the need for initial public offerings
Social gaming company Zynga, Inc.’s massive new $180 million financing led by Digital Sky “will provide many of the benefits of an IPO without the hassle and extra scrutiny,” said Mark Pincus, chief executive of Zynga
As with the Facebook financing, which also included Digital Sky agreeing to acquire up to $100 million of employees’ common stock, part of the $180 million will be used to buy shares from investors and employees
- In May, Digital Sky invested $200 million in Facebook, taking a 1.96% equity stake at a $10 billion valuation
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