The round would seem to represent Sharespost’s first outside financing. Until recently, it has been bootstrapped, including by founder Greg Brogger, who told me last year that the “plucky upstart” had already been approached a number of times by VCs and was, at that moment, “continuing to consider whether or not we want to go down that path.”
Brogger hasn’t responded to requests for comment, but it isn’t surprising that Sharepost is finally enlisting the help of outside investors. Since its June 2009 launch, the company has taken off like a rocket by connecting private company shareholders with accredited investors via company-specific bulletin boards. In spring of last year, it had registered 17,000 users. By year end, that number had reached 37,000. And Brogger believes that many more deals happen off Sharespost’s platform by people who connect via Sharespost but do their horse-trading elsewhere.
Still, because it isn’t a broker-dealer like SecondMarket, Sharespost hasn’t been able to capitalize off that activity; instead its plan has been to build a community and hope to find a way to wring millions of dollars out of it afterward.
Well, afterward is now. VentureWire last week reported that Sharespost has been raising its own special-purpose funds to buy up private-company shares and charge participants a 5 percent fee to manage them. According to VentureWire, Sharespost has already raised three such funds — two for Facebook shares and one for shares in LinkedIn, which is in registration for an IPO.
It’s a smart move. Many shareholders look to sell blocks of stock worth more than $1 million, which is pretty steep, even for Sharespost’s accredited investors. Meanwhile, investors can chip in just $100,000 to buy into a Sharespost fund.
As VentureWire points out, there’s also a downside to Sharespost’s new money-making scheme. Specifically, the funds bring Sharespost into direct competition with accredited investors who can afford to buy multimillion-blocks of stocks through its platform. It also positions Sharepost against a spate of other funds and competitors, most with well-connected investors.
It may explain why Sharespost is raising what seems like a fairly small round. While the company could certainly use the money, Sharespost could probably benefit even more from some new, high-powered friends of its own right now.