Catching the pre-IPO express

With more companies choosing to stay private longer and at higher valuations, some investors are having a tough time gaining access to the pre-IPO secondary market.

But Manhattan Venture Partners, a merchant bank focused on the secondary market for late-stage private tech companies, is hoping to remedy that.

Given current trends in the venture community, MVP, which came out of stealth and unveiled itself in late January, couldn’t be launching at a more opportune time, according to Managing Partners Jared Carmel and Max Wolff.

“We provide access to what we hope to be less expensive valuations versus the upcoming liquidity event, whether it’s an IPO or a late-stage round of funding,” said Carmel, a former managing director and secondary markets director at GSV Financial Group.

Among its offerings, MVP provides reports on pre-IPO companies that are well funded by VCs.

Carmel said that MVP will also make direct investments in companies, using its own capital, as well as serving as an advisor on deals. And it plans to connect stockholders with other investors who are interested in buying pre-IPO stock on the secondary market, a la a SecondMarket.

MVP’s co-founders said they have unlocked a relatively new asset class for efficiently divesting pre-IPO stock from lower-risk, growth-stage companies with a shorter time to exit.

“We have a few models that we will be working with,” Carmel said.

“The infrastructure of going public and being public has changed,” Wolff said. “The small investment banks are creatures of the historic memory. To get analyst coverage and attention, you usually need to go public at over $500 million market cap minimum. You need to attract tier-one multiple investment banks and you need to capture retail and or institutional attention, which is very difficult to do unless you’re larger or global.”

In this vein, MVP may be filling a void in the marketplace.

“We see ourselves as providing liquidity to the men and women who are building tomorrow’s technology,” Wolff said.

Iris Dorbian is a New Jersey-based contributor. She can be reached at irisdorbian@gmail.com.