AlwaysOn is excited to present the 2009 AlwaysOn East 100 Overall Winner, SecondMarket.

Difficult economic times call for new innovations in market efficiency. A longer timeline for IPOs and acquisitions due to regulation and market cycles means that not all investors can afford to wait for the exit. As a result, a second market for private-company stock has grown up, but up till now it's remained inefficient and opaque.

That's where the AlwaysOn East 100 overall winner comes in. SecondMarket, is giving secondary market investors a new, robust platform for trading illiquid assets as well as private company securities, and providing a central market where private companies and their employees can sell stock. The company also works with investors on executing private and public illiquid-asset transactions. It serves a wide variety of financial institutions as well as individual investors, and currently claims about 3,000 participants that collectively manage more than $1 trillion in assets available for investment.

(For a full list of the AlwaysOn East 100 Winners, click here.)

The secondary market already provides a way for founders, employees, and VCs to get their money out of a startup. SecondMarket provides a robust platform for buyers and sellers to connect—in return for putting the investors and shareholders together, the company collects 2% fee from each side. The environment is designed to give companies more control over how they sell their stock and to whom.
The delay of many venture-backed exits is bringing business to the secondary market. A delay in exit means VCs can’t get their cash out of the initial investment and either repay investors or look for new opportunities. Additionally, employees at start-ups who took low salaries in return for equity stakes are looking for a way to realize a return on their “sweat” investments.

Unregistered securities of private companies often disclose meager financial information, so the risk in purchasing them is high. Only a small pool of accredited investors and qualified institutions can trade in unregistered securities. These buyers must be sound enough to invest in high-risk businesses, where little public information is available.

The company runs several markets for illiquid assets, including ones for restricted public equities and bankruptcy claims. Most recently, it created a market for banks to find buyers for troubled assets such as mortgage-backed securities and collateralized debt obligations. SecondMarket took a first round of funding from FirstMark Capital back in 2007. As it looks toward the future, SecondMarket is committed to giving startup companies a platform they can use to communicate with their shareholders and connect with buyers they might not otherwise have discovered.

The AlwaysOn East 100 Overall Winner represents the best of the booming startup community on the East Coast. The winner was selected from hundreds of nominations from technology insiders, venture capital gurus, and industry players. We congratulate SecondMarket and look forward to seeing its growing impact on the technology economy.

SecondMarket and the rest of the AlwaysOn East 100 will be honored at Venture Summit East May 20-22, 2009 at the Mandarin Oriental in Boston, MA. Click here to take advantage of the AO Reader discount while seats remain available.