SecondMarket, which bills itself as a place to buy and sell otherwise illiquid assets, launched a site today called Private Company Marketplace. The tool will allow private company stakeholders — including founders, angel, venture and private equity investors, and employees — to list shares to sell to accredited investors.
It’s interesting timing for a launch, as everyone knows it’s virtually impossible for private companies to go public or get acquired for a juicy multiple these days. And it’s also common knowledge that among those companies that probably could’ve scored a nice exit under better market conditions, a lot of shareholders would love to get some liquidity.
The venture-backed company doesn’t yet have any active companies (aside from itself), but has compiled a watchlist (http://www.secondmarket.com/watchlist/el) of companies that have either drawn interest from buyers, expressed interest in selling shares, or already done private share sales. The list largely consists of prominent venture-backed companies, including Facebook, Twitter, Tesla Motors, and SilverSpring Networks. (Some, like Facebook, have already provided ways for employees and other stakeholders to sell some shares).
I spoke earlier today to Adam Oliveri, managing director of the Private Company Market, who’s planning a road show in the next couple months to try and drum up companies to list. While private share marketplaces have flopped before, Oliveri says current market conditions are favorable. “The recent shutdown in the IPO market and slow M&A markets have put the concept of needing liquidity and not being able to get it to the forefront,” he says. “That has made people receptive to the idea who previously were not.”
He says investment sizes for private share offerings the company has previously worked on have ranged in size from $150,000 to $22 million – he’s expecting most transactions on the private company market will be on the low end of that range.
As a reporter, I was disappointed to learn that companies listing on the site won’t have to disclose publicly how many shares they’re selling, and at what valuation. Basically, each selling company gets to decide how much information to disclose and which prospective buyers can look at that information. Of course, they’re welcome to provide detailed information, and I hope they do.