Can’t wait for your favourite internet company to have an IPO? You don’t have to!
SecondMarket — which announced an all-stock purchase of InsideVenture yesterday — is a trading platform specializing in illiquid assets — CDOs, mortgage-backed securities, bankruptcy claims, and the like.
They also trade in private companies, allowing venture capitalists to sell off their investments before a company goes public. Bloomberg TV’s Sheila Dharmarajan gave a nice introduction today.
Some of the details:
- This is a controlled market — you need to apply for accreditation before you can trade.
- Although buyers and sellers are matched online, transactions have to be completed offline.
- Private companies do not have the same transparency requirements as corporations, so buyers are working with limited information.
- The average time between a company receiving venture funding has steadily risen, and is now 10 years, increasing the demand for this service.