Thursday, October 8, 2009

Venture Capital: Exits-"Secondary Markets Consolidate Already?"

Even if you include the $10 Bil. that Santander and Verisk raised this week, the IPO biz is not exactly red hot. A123's success was as much about the dearth of other opportunities in the sector as it was about the underpricing by the underwriters.

These secondary markets facilitate some liquidity but haven't really proven themselves yet.

We noted the green angle to secondary markets in "Private Equity, Venture Capital: "SharesPost Enables Trading of Green Startups"".

Here are the latest goings-on, from the WSJ's Venture Capital Dispatch blog:
Every few weeks it seems I get a pitch from a new secondary market that allows certain investors to buy and sell shares in private companies. Last week, for example, a flack emailed me about an Atlanta-based entrepreneur who has created an online marketplace that promises to be the “eBay of the secondary market.” It’s one of several private-company exchanges to crop up in the past year to help investors find some liquidity for their start-ups, but VCs largely remain skeptical. Now one of the largest such exchanges, SecondMarket, has acquired InsideVenture, which offers a different way to help VCs and venture-backed companies cash out. Is this consolidation a bad sign for this young industry? The CEOs of both companies share their motives with In a nutshell, they say the two companies would have ended up competing with each other. InsideVenture, which helps match institutional investors with private companies through conferences, struggled somewhat in the early going to attract enough buysiders, as we reported earlier….