SharesPost is a leader in creating a marketplace for secondary market transactions in private companies. The company also generates fees on Special Purpose Vehicles it creates. SharesPost is a network effect business where more members and investors attract more sellers of shares in private companies.
The structural changes that have impacted the capital markets are permanent, and emerging growth companies and investors need a new marketplace that reflects these changes. SharesPost has strong momentum and is starting to achieve network effects with enormous valuation potential.
Greg Brogger is the CEO and Founder of SharesPost, which he started in early 2009 to bring transparency, efficiency and scale to private securities transactions. Prior to Sharespost, Greg was co-founder of TrueCar and member of the founding team at CarsDirect.com.
SharesPost is an electronic marketplace for buyers and sellers of top VC-backed private securities. What eBay did for garage sales – organizing chaos and creating an ecosystem – is what SharesPost is doing for private shares. In addition to generating commissions on individual transactions, SharesPost creates SPVs for shares in select companies and holds auctions as a means for its members to buy into the SPVs. SharesPost receives fees on the creation, management and ultimate distribution of the SPVs.
Trading in private companies is growing rapidly, driven by the structural changes that have taken place in the capital markets in the last decade. It’s estimated that there are over 3,000 VC backed private companies with a market value of over $100 million. The time from VC investment to going public has gone from 3.1 years to 9.4 years in the past decade. The void that exists for private companies and investors provides an opportunity for SharesPost to become the new NASDAQ. If trading volume continues to increase and SharesPost captures its fair share of this activity, the opportunity is several billion dollars.
SharesPost can become the go-to-platform for private investors. VCs are also increasingly utilizing secondary markets in order to monetize portfolio investments. NASDAQ is a multi-billion company created by serving as the exchange for emerging growth companies. SharesPost has the opportunity to be the exchange for the emerging growth stars of tomorrow.
Near term visibility is good and the company sees compelling growth going forward.
Late stage, private companies could choose to limit or eliminate trading of their shares, which would decrease activity on Sharespost.
GSVC percentage figures are based upon the fair value of each holding as of the quarter ended December 31, 2016, or the cost basis of the holding (exclusive of transaction costs) if the investment closed subsequent to December 31, 2016. In either case, these values are divided by the fair value of total portfolio investments of GSV Capital as of December 31, 2016.