She’s Back—Mona DeFrawi, Former CEO of InsideVenture, Launching Equidity

More than a year after SecondMarket bought InsideVenture, Mona DeFrawi is apparently planning her return.

DeFrawi, who was CEO of Menlo Park, Calif.-based InsideVenture, has started a new company called Equidity. She told me that she’s not yet ready to make an announcement at this time, but, according to the website, Equidity looks poised to help small- and mid-cap venture-backed companies gain access to the capital markets.

“It has been a year since InsideVenture’s acquisition, and the capital markets’ structure that supports the growth of terrific venture-backed companies is still broken, with very few IPO successes to claim,” she said to me. “Clearly we are experiencing market structure, not market cycle issues.”

She added that Equidity will soon announce solutions to the liquidity and valuation issues that have “been chronically plaguing our industry—the growth engine of the U.S. economy—for an entire decade now.”

At InsideVenture, which was launched in 2008 and was similarly tasked with helping late stage companies achieve liquidity in one of the worst public markets in recent memory, DeFrawi created an investors conference in March 2009, held in Santa Barbara, Calif., in which 50 late stage private companies presented to a mix of PE firms, late stage venture investors and mutual funds. The idea was to get the buyers to invest in the companies, which otherwise in better times might go straight to IPO. A total of 140 companies were nominated and vied for the 50 slots.

With the momentum of that conference on her back, DeFrawi then told me last year that she was considering holding conferences for cleantech companies and for companies interested in the secondaries market.

Then, New York-based SecondMarket, which operates an online marketplace and auction platform for alternative assets, bought InsideVenture for an undisclosed price, the sale of which gave InsideVenture’s backers, including New Enterprise Associates, a stake in SecondMarket.

I haven’t yet talked to Barry Silbert, CEO of SecondMarket about Equidity, but I can’t imagine he’s losing sleep. At the time of the acquisition, Silbert said that one draw for buying InsideVenture was the network that the company had built up, including the mix of institutional investors, investment bankers, venture capitalists and private company executives. Since the acquisition, SecondMarket has become the largest facilitator of trading shares of private companies, such as Facebook and Zynga Game Network, and other illiquid securities.