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Private Stock Transactions Up 73 Percent This Year On SecondMarket

Despite a couple big-name companies like Groupon and Zynga lining up for IPOs, the demand for private company stock on alternative exchanges keeps rising. Private stock transactions on SecondMarket in the first three quarters of 2011 totaled $435 million, a 73 percent increase over the same period last year. In the third quarter alone, there were $167 million worth of transactions on SecondMarket, up 49 percent from the second quarter . Who is buying all of these shares? SecondMarket breaks it out in its third quarter report . Wealthy "accredited individuals" made up the largest share of buyers (63 percent by dollar amount), followed by asset managers (22.3 percent of transactions), hedge funds (7.8 percent), and venture capital funds (5.1 percent). VC funds became much more active on SecondMarket in the quarter, accounting for 17.5 percent of the transactions by number. Last quarter, VCs made up less than 1 percent of transactions (and only 0.2 percent by dollar amount).
SecondMarket - Buyers

Despite a couple big-name companies like Groupon and Zynga lining up for IPOs, the demand for private company stock on alternative exchanges keeps rising. Private stock transactions on SecondMarket in the first three quarters of 2011 totaled $435 million, a 73 percent increase over the same period last year. In the third quarter alone, there were $167 million worth of transactions on SecondMarket, up 49 percent from the second quarter.

Who is buying all of these shares? SecondMarket breaks it out in its third quarter report. Wealthy “accredited individuals” made up the largest share of buyers (63 percent by dollar amount), followed by asset managers (22.3 percent of transactions), hedge funds (7.8 percent), and venture capital funds (5.1 percent). VC funds became much more active on SecondMarket in the quarter, accounting for 17.5 percent of the transactions by number. Last quarter, VCs made up less than 1 percent of transactions (and only 0.2 percent by dollar amount).

On the seller’s side, former employees made up the bulk of completed transactions (64.5 percent). But current employees took the No.2 spot with 16.9 percent of transactions , nearly quadruple the 4.4 percent of transactions they represented in the second quarter. The number of transactions with investors selling doubled to 8.4 percent, signaling that secondary markets are becoming a more accepted liquidity valve for current employes and shareholders. Founders represented the smallest amount of transactions, at 3.6 percent, but that is up from 1.9 percent last quarter.

SecondMarket also tracks the “most watched” companies on its service, which is an indication of investor interest. The most watched companies didn’t change from last quarter: (Facebook, Twitter, Groupon, Zynga, Foursquare, Dropbox, etc.). But there is a new group of “rising stars.” These include Turntable, Jetsetter, and Klout. And then bubbling up just below the rising stars are the “newbies”: Pinterest, Billfloat, Firstwind, Proofpoint, and Zaarly. Hmm, is there a correlation between how much press a company gets and interest on SecondMarket?



CrunchbaseCompany:SecondMarketWebsite:SecondMarket.comLaunch Date:October 26, 2011Funding:$19.2M

SecondMarket is the marketplace for alternative investments. It has become the online destination for accessing market data, building your investor network and transacting in assets such as private company stock, structured products, public equity and bankruptcy claims. SecondMarket centralizes and simplifies secondary market activity by connecting buyers and sellers, and providing world-class market and operations expertise. Since 2004, SecondMarket has brought together more than 75,000 individuals and institutions and completed billions of dollars in alternative investment transactions. SecondMarket is...

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Company:PinterestWebsite:pinterest.comLaunch Date:October 26, 2011Funding:$37.5M

Pinterest is a social catalog service. Think of it as a virtual pinboard — a place where you can post collections of things you love, and “follow” collections created by people with great taste.

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Company:DropboxWebsite:dropbox.comFunding:$257M

Dropbox was founded in 2007 by Drew Houston and Arash Ferdowsi. Frustrated by working from multiple computers, Drew was inspired to create a service that would let people bring all their files anywhere, with no need to email around attachments. Drew created a demo of Dropbox and showed it to fellow MIT student Arash Ferdowsi, who dropped out with only one semester left to help make Dropbox a reality. Guiding their decisions was a relentless focus on crafting a...

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