About
SharesPost is a leader in creating a marketplace for secondary market transactions in private companies. It has 77,000 registered accounts and approximately 150 companies listed on its platform, with 20-30 companies trading frequently. 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.
Thesis
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 tremendous momentum and is starting to achieve network effects with enormous valuation potential.
People
CEO David Weir was the CEO at JPMorgan Canada and Head of Technology at JP Morgan in San Francisco. Previously, he was the CEO of OffRoad Capital. Founder Gregg Brogger was at Wilson Sonsini then at Idealab.
Key Board Members:
- Allen Morgan
- Michael Moe (Board Member)
Management Team
- Sam Hayes, EVP Marketplace
- Prior Head of Java Dev. at Sun Micro; Marketing at Akamai
- Kevin Burkhardt, CTO
- Prior CTO of BrightHouse; CTO at Mobile E previously
- Ryan Stroub, CFO
- Former CFO at Thomas Weisel Partners
Product
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.
Potential
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.
Megatrends
- Internet
- Globalization
- Outsourcing
How Big Can This Be?
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 $4 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.
Predictability
Near term visibility is good and the company sees strong growth going forward for the next 12 months.
Risks
Trade activity relating to Facebook will cease when Facebook goes public. SecondMarket is an active competitor with a broader product offering. Potential regulatory risks with SEC and FINRA.
