SecondMarket.com whopping startups venture market

In its startups shares trading platform, SecondMarket CEO Mr. Silbert said he hoped to create a more transparent structure for the market.

Before any shares are traded, he says it will contact every company for approval. It will also give businesses the power to define the parameters for its trades.

For example, a company can determine the type of investors that are eligible and the structure of the auction process. Meanwhile, for investors, SecondMarket will aggregate publicly available data, including filings, and encourage companies to submit additional financial information.

SecondMarket, a leading platform to buy and sell private company shares and other illiquid assets, is set to unveil Friday its new look and social marketplace, designed to broaden the world of secondary market trading to any private company and the world's investors. "We're expanding the universe of companies that are discoverable to over 12,000," said Barry Silbert, founder and CEO of SecondMarket, in an interview. Currently, there are 50,000 members on SecondMarket, the vast majority of whom are buyers of stock.

Heretofore, SecondMarket had listed 500 companies, with the bulk of trading and interest coming from the likes of Facebook, Zynga, Groupon, to name a few. Indeed, 40% of last year's $400 million in private company trading came from trading in Facebook shares alone. With Facebook potentially hitting the public markets in 2012, SecondMarket is hoping to tee up a whole new crop of trading opportunities.

"What's interesting is that over the past 18 months, we've received inquiries from sellers in 1000 companies," Barry added. To this end, SecondMarket has developed a platform to allow demand to be created for those companies. "The idea is crowd-source which companies people want to buy and sell stock in... We're now giving the crowd the opportunity to identify the companies to invest in."

In order to aggregate demand and enable the crowd to identify which companies they're interested in, SecondMarket has tapped into the social sphere by creating a platform upon which members can create a profile for themselves, a watch list of companies, as well as a trusted network of colleagues to learn from and share activity in companies. "If you look at the way people invest in companies, it's social," Barry explained. "We're helping faciltate offline relationships online."

SecondMarket plans to capture information about the most-watched companies and aggregate the price at which buyers are willing to pay. If they have enough demand, they will aproach a company and suggest that they create a market for their stock. "There wont’ be a need to create a market unless there’s sufficient demand," said Barry.

The UI (user interface) is pretty sweet and simple. I was one of the 100 beta testers who got to check it out. Once registered, you're automatically following SecondMaket, but you can choose from the thousands of companies listed.

As SecondMarket expands, there is concern that it is helping to fuel an already overheated market and opening the doors to less viable business. Although Zynga, Facebook and Groupon are churning out significant annual revenue, it’s unlikely that the 12,000 businesses in SecondMarket’s expanded universe (the majority of which are technology companies) can boast the same. SecondMarket’s investors must be accredited — meaning they have at least $1 million in assets or an annual salary $200,000 — but Peter Falvey, a managing director at Morgan Keegan, said there’s still not enough information available to help them make prudent decisions.

“It’s hard enough to get information on Facebook,” he said. “I’m an accredited, I have an M.B.A. in finance, how do I know what these things should be valued at?”

Leadind startups rating expert Edward Mushinsky predict startups trading boost
on http://futurerating.blogspot.com/2011/03/marketplace-for-private-internet.html