February 28, 2024

You’re the Boss Blog: Would you consider SecondMarket to Finance Your Business?

Today’s Question

What small-business owners think.

In his column today, Andrew Ross Sorkin writes about how SecondMarket is serving as something of an eBay for shares of private companies.

Mr Sorkin explains what Barry Silbert, chief executive, had in mind when he started SecondMarket:

Mr. Silbert, who looks even younger than his 35 years, set out in 2004 to create a market for secondary shares, allowing private companies that are often too small to go public to have their employees and investors sell their shares on an exchange.

His exchange allows for certain rules that the public market does not: a company selling shares on SecondMarket can choose which investors are allowed to buy — weeding out fast-buck artists — and how frequently they can trade those shares. If a company wants to allow investors to trade their shares only twice a year on specific dates, that’s fine.

The benefits are obvious: employees and investors can cash out some of their stakes without having to go through the formal and rigorous process of an initial public offering. That, in turn, can allow traditionally cash-poor pre-I.P.O. employees, for example, to afford to stay at an emerging company that might not be ready to pursue an I.P.O. until it matures some more.

Would you consider using SecondMarket to finance your company?

Article source: http://feeds.nytimes.com/click.phdo?i=4b2298062f1b4ece5ee3c10c9ce0a74a

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