
NASDAQ Acquires SecondMarket to Help Startups Sell Shares - lleims
http://techcrunch.com/2015/10/22/nasdaq-acquires-secondmarket-to-help-startups-sell-shares/#.jrggkr:F7Ci
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chollida1
Y Combinator is moving up the funding chain with a fund raised for follow on
funding rounds

Nasdaq is moving down the funding chain by acquiring a market for trading
equity in pre-public companies.

Hedge fund and Private equity are starting to participate more in pre-public
funding rounds.

Everyone is encroaching on the turf that used to belong solely to the Venture
Capitalists.

I'm really not sure how to read this.

\- is the market telling vc's they are doing a poor job?

\- is the market getting a bit bubblish?

I think the day of vc's making 2 and 20 are coming to a close. Especially if
they want to lock up your money for 7-10 years. I think the new pay paradigm
for vc funds will be a flat management fee(much less than 2% per year) and
stepped payouts ratio where the vc gets a gradually increasing percentage of
profits up to their customary 20%.

As to the private equity markets, there are already markets hosted by the
public markets for trading restricted shares of public companies. Restricted
shares are shares issued by a company to do secondary raises(post IPO raise),
usually granted with a warrant and below the current market value that can't
be traded for a set period of time, usually 3-4 months.

This acquisition seems like a natural extension of those markets.

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pbreit
All of your examples suggest that it's the public markets that are not doing
their job.

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vonklaus
This is very true. While there has never been a bubble without the public
markets involved, there has also never been this degree of capital deployed in
private markets. I mean that as an investment, in the sense that if I lend my
neighbor $5K to start up a farm or something, I have money in the "private
market", but I have a firm idea of where it is and how it is being used. This
has been historically how capital was in private markets, pre-tech.

However, now there are large funds, and funds of funds, taking investor money
and parking it into vc & pe firms, as well as companies directly. All of these
companies have fees associated with deploying the capital and are competing
for a finite resource, driving up the price.

The public markets are extremely efficient at whatever they're for now, mainly
HFA, gambling, and FOREX liquidity, and warnings that something bad has
happened in the world. Or for alerting the world that the FED is making an
announcement. They are not used for raising capital to fund business
expansion. They are a last resort for dumping a failing company or a forced
move because a company scaled out and has hit shareholder max and therefore is
defacto public anyway.

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pbreit
What I meant is that all the activity you reference is because of the
difficulty or undesirability of IPOing.

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AndrewKemendo
If these shares become traded to the general public, then you really have a
bubble with some wide ranging impact. What is it, like the pinksheets?

