Tag: sharespost

Markets for shares in private companies have seen a roller-coaster of a ride the past few years. Companies like Sharespost and Secondshares, were thriving firms, enabling founders and early investors in startups to sell some or all of their stakes — without the need for an IPO or M&A transaction. These markets were a godsend for many entrepreneurs and early-stage investors. But that was all before Facebook IPO’d. The massive social network provided so much of the liquidity on these exchanges that after Facebook went public, these markets saw their liquidity dry up. Matching supply and demand in private shares Low liquidity in private shares markets amplifies the effects of small transactions. Just like in thinly-traded stocks on Wall Street, one buyer or seller can cause share prices to swing wildly given the large differences in Bid and Ask prices. Same thing goes for private shares. If a founder is looking to unload a portion of his stake, just the signal of a seller in the private stock could send the stock price reeling. Major stock exchange, Nasdaq believes...