So you're a successful co-founder or employee in a privately held startup. You've gone through a couple rounds of financing, you're cashflow positive, and you still own a decent chunk of your company. But all your net worth is tied up in your company stock. You want to cash out, but not entirely -- just enough to buy that brand new Tesla  roadster. What are your alternatives?
You could go public, but you don't want to be subjected to the demands of the market or regulators. You could sell some shares to later stage VCs, but that's not such a sweet deal because they'll likely pay only at deep discounts.
Consider going "prublic", a term coined by Tim Draper  of DJF . A hybrid between staying private and an IPO, going "prublic" refers to the use of secondary markets by investors, founders, and employees with equity in private companies to sell their shares to interested buyers while keeping the company private. Founders can have their cake (or Tesla roadster) and eat it too.
"One dynamic that is changing is all the activity in the secondary market where founders can get a little bit of liquidity from existing investors or incoming investors. Sometimes that can allow them to take a few chips off the table yet still take a risk over the next 2 years [by staying in the company as opposed to exiting in a liquidity event] and not take all their chips down. That's a useful tool for capital markets."
- John Simon, General Catalyst Partners 
Buyers of these shares benefit as well because they get an early piece of the action on hot companies like Twitter, Facebook, Linkedin, Zynga, Groupon, and other breakout companies that haven't yet IPO'd. The prublic route is still somewhat in its infancy but it's catching on, and companies like SharesPost  and SecondMarket  are seeking to fill the need. For example, there's been some talk that SharesPost will be auctioning an additional batch of Facebook shares this month. Given all the Goldman-driven excitement already surrounding Facebook, it is certain that secondary markets like SharesPost will gain in popularity.
Since June 2009, SharesPost has already grown to 45,000 members managing $125 billion in capital. Transaction volume has grown to $1 billion in orders to buy or sell about 150 of the hottest startups (including the ones mentioned above) over which investors could salivate.
With the time-to-IPO stretching from roughly 5 years during the height of the tech boom to 10+ years in the current environment, co-founders Greg Brogger and Sam Hayes of SharesPost saw a growing number of restless seed investors and employees at private companies seeking to cash in some of their shares. Back then, the process was labor intensive, lengthy due to negotiations between lawyers of buyers and sellers, and paper intensive since each contract goes through a cycle of revisions and customization.
SharesPost streamlines the process with standard forms, trusted 3rd party service providers, and increased transparency and context on essential aspects of the deal such as restrictions on the current holder's shares. Says CEO, David Weir, SharesPost has become particularly relevant now because broadband access is pervasive and people are accustomed to online trading tools.
Still, going "prublic" is not without its challenges. The process is still fundamentally a "buyer beware" transaction since investors are expected to be sophisticated. It is still advised that both parties consult legal counsel and/or other experts since you can't entirely eliminate the back-and-forth contract negotiations and thorough due diligence. Further, there are regulatory aspects to consider such as the 5 conditions of Rule 144 . And much has already been written about increased scrutiny by the SEC of private companies with more than 499 investors .
In spite of these challenges, David Weir sees a bright future for the prublic route. And so do many big name investors:
"If you're a good company and you feel you're in a great place and you don't want to sell out (i.e. go public), you didn't have very many options. Either you go public, or some of these later stage VC firms will buy founder's shares; but they're paying wholesale not retail. Some time soon, there'll be an opportunity where we'll be able to go "Prublic" and take an XPO rather than IPO. And you have high net worth individuals, and possibly qualified institutions, buying and trading your stock. That will become a fairly popular option."
-Tim Draper, DFJ
Jeffery To is a corporate entrepreneur and IBM Innovator Award Winner who covers hot topics in Silicon Valley and Silicon Alley.