SecondMarket‘s Private Company Market had its best quarter to date in Q3, completing over $167 million in private stock transactions last quarter. Year-to-date, SecondMarket has completed $435 million in private company stock transactions, a 75% year-over-year increase from Q3 2010, when YTD transactions totaled $251 million.
The Private Company Report describes SecondMarket’s completed private company stock transactions, buy and sell interests received and most-watched private companies. The report is organized into three sections:
In the third quarter of 2011, the Consumer Web and Social Media industry continued to dominate transactions on SecondMarket, accounting for 62% of private stock transactions. Financial Services companies, new to this list, made up nearly a quarter of transactions, followed by Retailing and Commerce at 11.4%.
Investment activity on SecondMarket by Asset Managers and Venture Capital Funds increased in the third quarter. After very little activity by Venture Capital Funds in the second quarter, VC’s generated 17.5% of transactions in Q3. Asset Managers completed 27.7% of all transactions, representing 22.3% of total transaction value last quarter.
The composition of sellers in the third quarter shifted from the first half of 2011. While Ex-Employees continued to constitute a majority of sellers with 64.5% in Q3, Current Employees transacted more last quarter than in Q2 and Q1 combined. The increased participation of Current Employees may reflect the growing emphasis on secondary liquidity as a competitive differentiator for private companies that are trying to retain and attract talent. Investors comprised 8.4% of private stock sales this quarter after a relative absence in the first half of the year.
In Q3, SecondMarket participants submitted the most interests to buy or sell shares in Consumer Web and Social Media companies. Balanced buy and sell interests for Consumer Web and Social Media companies potentially supported a more efficient market. Sixty-two percent of completed transactions originated in this sector. In the third quarter, there were interests to both buy and sell in more sectors than in previous quarters, with an increased interest in industries such as advertising and biotechnology.
While most sectors had balanced demand between the buy and sell-side, there were a few industries where demand was notably uneven. Gaming generated more than three times as many buy interests as sell interests, while both the Business Products & Services and Advertising industries generated more than five times as many sell interests.
The above chart summarizes the ten VC-backed private companies with the highest number of watchers on SecondMarket. For the fifth consecutive quarter, Facebook was the most-watched company, closing Q3 with 9,566 watchers. Twitter, once again in the #2 spot, followed Facebook with 5,414 watchers.
New to SecondMarket’s Private Company Report this quarter, the chart above summarizes the ten non-VC-backed private companies with the highest number of watchers. Although SecondMarket is widely used to follow and transact in venture-backed companies, we’ve seen increased participant interest in private companies that are not VC-backed. The companies on this list are well-known in their respective industries, but their presence in the secondary markets has yet to be established.
Media giant Bloomberg tops the most-watched list with 709 followers. Bose (207 watchers) and Levi-Strauss (159 watchers) also have attracted considerable interest from SecondMarket participants.
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“Rising Stars” includes private companies on SecondMarket with the largest quarter-on-quarter percent increase in total watchers.
Turntable.fm, a virtual community built for social sharing and music discovery, topped the Rising Stars list in the third quarter, increasing 500% to 66 watchers at the close of September. Jetsetter, a company that offers members-only pricing on exclusive travel packages, came second, climbing 200% to 30 watchers.
Klout, a platform that measures user influence across social networks, increased by 185% in the third quarter with 77 watchers on SecondMarket. Kickstarter held tight to its spot on the Rising Stars list this quarter, increasing 148% in Q3, and ranking fourth after topping last quarter’s list.
ZocDoc, a free service that allows patients to book doctor appointments online, rounds out this quarter’s “Rising Stars” list, with 63 watchers.
“Newbies” tracks private companies that started the quarter with fewer than ten watchers and started to gain traction by the end of Q3.
Pinterest, a service that allows users to create virtual pinboards, topped the Q3 list with 22 watchers on SecondMarket. Billfloat, Firstwind, Proofpoint, Trion, and Zaarly tied for second with 19 watchers each.
SecondMarket’s “VC Scoreboard,” introduced in Q2, tracks the ten venture capital firms with the most portfolio companies in SecondMarket’s 100 most-watched list. Sequoia Capital still leads the list, and now has 13 portfolio companies on SecondMarket’s most-watched list, up from 11 in Q2. Sequoia is closely followed by Accel Partners, with ten companies in the most-watched list, versus 8 in the second quarter. Kleiner Perkins Caulfield & Byers ranks third on our scoreboard, with nine most-watched portfolio companies, up from seven companies in Q2.
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“Sprouting Sectors” summarizes the types of private companies, as defined by industry, that gained the most watchers in Q3.
Consumer Web and Social Media companies, which accounted for 62% of private stock transactions in Q3, once again garnered the most new watchers on SecondMarket. Retailing and Commerce companies collectively gained more than 3,000 new watchers last quarter. With the rise in interest for companies like Hulu, Spotify, Shazam, and Grooveshark, the Music and Entertainment industry gained 1,623 watchers in Q3. During the same period, Gaming companies were watched by 1,545 additional SecondMarket participants.
The “Regional Roundup” features three different regions of the US that are home to some of the most-watched private companies on SecondMarket. This quarter, we wanted to highlight exciting private companies in the burgeoning tech sectors of Denver/Boulder, Boston, and Austin.
Please note that the information in this report does not constitute an offer to sell to, nor a solicitation of an offer to buy from, nor shall any securities be offered or sold to, any person in any jurisdiction in which such an offer, solicitation or sale would be unlawful. There is not enough information contained in this message in which to make an investment decision and any information contained herein should not be used as a basis for this purpose.
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