SecondMarket Pivoted After Facebook’s IPO. Now, Volume Is Higher Than Ever
SecondMarket, the company behind the marketplace for trading shares of private companies, announced that its chief executive and founder, Barry Silbert, would step down to focus on all things Bitcoin. Silbert has been a major Bitcoin enthusiast and investor in the sector — backing at least 30 companies in recent years — and will now head up SecondMarket’s Bitcoin business full-time and serve as chairman of SecondMarket Holdings, the parent company to both businesses.
Erin Griffith, columnist at Fortune, sat down for a Q&A with Bill Siegel, interim CEO of SecondMarket, to talk about investor sentiment around secondaries, and more. Among the key points discussed:
- Late 2011 was the fever pitch of pure, over-the-counter, pre-IPO private company stock trading mania, centered mostly around Facebook. But then the market shifted, and a lot of the other private companies didn’t like the way the pre-IPO market was shaping up.
- This year, SecondMarket is having a record year. They’ve done almost $1 billion in private company secondaries in first half of this year alone.
- The pressure to give employees a little bit of liquidity will not go away. Fast-growing businesses are going to see the pressure increase. The right-of-first-refusal (ROFR) requests are not going to stop as the company grows, gets more mature, and builds up a large ex-employee stockholder base.
- The future of secondaries is trending towards repeat and recurring tender offerings, and that is being messaged to employees at the company. People look at equity as a lottery ticket. When you run a tender offer every year or twice a year, that shifts the way the employees view that stock. This is actually now compensation – not just a lottery ticket. That’s really meaningful, especially for growth companies, because these companies can use that as a retention tool, and it can be a meaningful part of compensation.