SecondMarket's Barry Silbert On Making A Better Market For Private-Company Shares

Imagine that you are an employee at a hot Silicon Valley startup. Your salary is solid, but you know that your real payoff will come one day—in a year, or four years, or some undetermined day down the road—when your company has an IPO and its much-lusted-after shares get bid up by eager investors. But, for whatever reason—you want to buy a house, you want to diversify your personal assets, you want to leave the company before it goes public—you don't want to wait that long.

Now imagine you are an investor. You know about hot Silicon Valley startups like Facebook and Twitter, but you don't work there. Because the company is private, there is no real way to invest or take a chance on future profits unless you're an employee, an angel investor, a venture capitalist, or a bank. 

Wouldn't it be nice if there were some way person B could buy some of person A's stake?

Enter SecondMarket, the largest secondary market for private-company shares and one of our Most Innovative Companies in finance. Founded by CEO Barry E. Silbert, the New York-based broker dealer is putting together buyers and sellers in what was once a nonexistent market.

"We are creating a better marketplace, a place where fast-growing private companies can access capital, where their shareholders can be able to get some liquidity, and we're also giving investors access to these companies they never had access to before," Silbert says. 

Silbert recently spoke with Fast Company about innovating in a space that is firmly ruled by establishment, and how there really is room for the more-nimble little guy. Watch the video below to learn more about how SecondMarket does it. 

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[Photo: Flickr user killthebird]

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1 Comments

  • Selim Targay

    Great concept except that it does not really work, nowhere close to liquid.  You can spend months indicating 'interest' in companies in any amount and you will almost never hear anything back on sellers that want to sell.  Maybe there is liquidity for the $1M+ range investors, but the idea of secondmarket sounded like them trying to open these markets to smaller investments like $10,000-$100,000 (not necessarily smaller investors).