How To Buy Facebook Stock Before Its IPO

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.

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