SecondMarket
SecondMarket (formerly Restricted Stock Partners) is an online marketplace for buying and selling illiquid assets, including , bankruptcy claims, limited partnership interests, private company stock, restricted securities in public companies, structured products, and whole loans.
SecondMarket's participants include global financial institutions, hedge funds, private equity firms, mutual funds, corporations and other institutional and accredited investors.
The website was created in 2004.
History
SecondMarket was founded in 2004 by Barry Silbert originally to address the growing need for liquidity for restricted securities in public companies. Beginning in early 2008, SecondMarket expanded into a number of other asset classes - first , then bankruptcy claims, limited partnership interests, structured products (MBS, CDOs, ABS), whole loans, private company stock, and lastly, government IOUs.
In 2007, the company raised an undisclosed amount of Series A financing from venture capital firm Pequot Ventures.
In February 2010, the company raised US$15 million to aid its expansion into Asia.
On September 1, 2010, the World Economic Forum announced the company as a Technology Pioneer for 2011.
Markets Trading on SecondMarket
Restricted Securities in Public Companies
Restricted securities, SecondMarket's initial market, utilizes privately negotiated transactions to provide access to liquidity in the trillion dollar restricted securities market. A privately negotiated sale allows buyers and sellers to trade registered and unregistered securities, pursuant to certain guidelines and conditions of the Securities Act of 1933. Several types of restricted securities trade on SecondMarket:
* Registered and Unregistered Stock
* Affiliate and Control Stock
* Convertible and Preferred Securities
* Public Debt Instruments
* Registered and Unregistered Warrants
* Block Trades (Small- and Micro Cap)
* Portfolio of Securities
* Warrant Management
Auction-Rate Securities Market
As a result of the economic crisis, in February 2008, auction-rate securities (ARS) experienced widespread auction failures that left hundreds of billions of dollars “frozen” in suddenly illiquid auction-rate securities. In response, SecondMarket (then Restricted Stock Partners) opened up its marketplace to the trading of all ARS types including:
* Auction-rate CDOs
* Auction-rate preferred securities (ARPS)
* Municipal auction-rate securities (MARS)
* Student-loan auction-rate securities (SLARS)
Bankruptcy Claims Market
SecondMarket entered into the bankruptcy claims market in June 2008 by acquiring Trade Receivable Exchange, Inc. (T-REX) of Denver, at the time the largest online auction platform serving the bankruptcy trade claims market. A variety of different claim types trade over SecondMarket:
* Administrative Claims
* Lease and Contract Rejection Claims
* Secured Claims
* General Unsecured Claims
* Scheduled and Unscheduled Claims
* Scheduled Priority Claims
Limited Partnership Interests Market
In February 2009, SecondMarket opened its marketplace to , which are ownership rights in investment entities such as private equity funds, real estate funds, hedge funds, and fund of funds. Through this market, current limited partners are able to transfer future capital commitments to other investors who are better suited to satisfy the obligations.
Structured Products
In April 2009, Secondmarket opened the and markets. The variety of collateral types that can trade over SecondMarket are:
* Residential Mortgage-Backed Securities
* Corporate Mortgage-Backed Securities
* Other Asset Back Securities
* Corporate bonds (these structures are also known as Collateralized Bond Obligations or CBOs)
* Banks loans (the structures are also known as Collateralized Loan Obligations or CLOs)
* Credit derivatives
* Other CDOs (these structures are also known as CDO-squared)
* Other specialized debt types
Whole Loans
Launched in April 2009, Through SecondMarket, private companies can opt-in to an organized, controlled private liquid environment that offers early investors and employee shareholders exit opportunity prior to an IPO or M&A event. Numerous high profile companies have traded over SecondMarket including Facebook, Tesla, Zynga and Twitter.
Government IOUs
SecondMarket’s government warrant market facilitates transactions in registered warrants (IOUs) issued by state governments. When the state of California issued warrants to its creditors in mid-2009, SecondMarket opened up a market place to facilitate the trading of government IOUs.
Investors
FirstMark Capital
SecondMarket closed a series A round from FirstMark Capital (previously named Pequot Ventures) in late 2007. Pequot was the $2 billion venture arm of hedge fund Pequot Capital Management, but in March 2008, it was spun off as a separate business and renamed. Over the past dozen years, the venture firm has opened seven funds, and it currently has $1 billion in actively managed and unallocated capital. The fund focuses on emerging media and advertising, data and analytics and infrastructure startups.
SVB Financial Group
SecondMarket's acquisition of InsideVenture led SVB to become an investor in SecondMarket in October 2009. SVB Financial Group provides financial services to emerging, growth and established technology companies in the life science, venture capital/private equity, and premium wine markets.
New Enterprise Association
SecondMarket's acquisition of InsideVenture also led NEA to become an investor in SecondMarket in October 2009. New Enterprise Associates (NEA) is a venture capital firm specializing in investments in venture growth equity at all points of developments, with a 60 percent focus on seed and start-up stage companies.
Horizons Ventures
SecondMarket secured a series B round from Horizons, the investment arm of Chinese business magnate Li Ka-shing, in January 2010.
Competitors
* Campbell Lutyens
* Cogent Partners
* GS TRuE
* GATE Technologies
* NASDAQ Portal Alliance
* NYPPEX
* Probitas Partners
* SharesPost.com
* Triago
* Zealous ATS
Key Board Members/Advisors
*Barry E. Silbert is the Founder and CEO
*Bill Seidman was a Senior Advisor to SecondMarket from 2008 until his death on May 13, 2009.
*Larry D. Lenihan, Jr. is the Founder, CEO, and Managing Director of FirstMark Capital.
*Chamath Palihapitiya is the Founder of The Social + Capital Partnership
SecondMarket's participants include global financial institutions, hedge funds, private equity firms, mutual funds, corporations and other institutional and accredited investors.
The website was created in 2004.
History
SecondMarket was founded in 2004 by Barry Silbert originally to address the growing need for liquidity for restricted securities in public companies. Beginning in early 2008, SecondMarket expanded into a number of other asset classes - first , then bankruptcy claims, limited partnership interests, structured products (MBS, CDOs, ABS), whole loans, private company stock, and lastly, government IOUs.
In 2007, the company raised an undisclosed amount of Series A financing from venture capital firm Pequot Ventures.
In February 2010, the company raised US$15 million to aid its expansion into Asia.
On September 1, 2010, the World Economic Forum announced the company as a Technology Pioneer for 2011.
Markets Trading on SecondMarket
Restricted Securities in Public Companies
Restricted securities, SecondMarket's initial market, utilizes privately negotiated transactions to provide access to liquidity in the trillion dollar restricted securities market. A privately negotiated sale allows buyers and sellers to trade registered and unregistered securities, pursuant to certain guidelines and conditions of the Securities Act of 1933. Several types of restricted securities trade on SecondMarket:
* Registered and Unregistered Stock
* Affiliate and Control Stock
* Convertible and Preferred Securities
* Public Debt Instruments
* Registered and Unregistered Warrants
* Block Trades (Small- and Micro Cap)
* Portfolio of Securities
* Warrant Management
Auction-Rate Securities Market
As a result of the economic crisis, in February 2008, auction-rate securities (ARS) experienced widespread auction failures that left hundreds of billions of dollars “frozen” in suddenly illiquid auction-rate securities. In response, SecondMarket (then Restricted Stock Partners) opened up its marketplace to the trading of all ARS types including:
* Auction-rate CDOs
* Auction-rate preferred securities (ARPS)
* Municipal auction-rate securities (MARS)
* Student-loan auction-rate securities (SLARS)
Bankruptcy Claims Market
SecondMarket entered into the bankruptcy claims market in June 2008 by acquiring Trade Receivable Exchange, Inc. (T-REX) of Denver, at the time the largest online auction platform serving the bankruptcy trade claims market. A variety of different claim types trade over SecondMarket:
* Administrative Claims
* Lease and Contract Rejection Claims
* Secured Claims
* General Unsecured Claims
* Scheduled and Unscheduled Claims
* Scheduled Priority Claims
Limited Partnership Interests Market
In February 2009, SecondMarket opened its marketplace to , which are ownership rights in investment entities such as private equity funds, real estate funds, hedge funds, and fund of funds. Through this market, current limited partners are able to transfer future capital commitments to other investors who are better suited to satisfy the obligations.
Structured Products
In April 2009, Secondmarket opened the and markets. The variety of collateral types that can trade over SecondMarket are:
* Residential Mortgage-Backed Securities
* Corporate Mortgage-Backed Securities
* Other Asset Back Securities
* Corporate bonds (these structures are also known as Collateralized Bond Obligations or CBOs)
* Banks loans (the structures are also known as Collateralized Loan Obligations or CLOs)
* Credit derivatives
* Other CDOs (these structures are also known as CDO-squared)
* Other specialized debt types
Whole Loans
Launched in April 2009, Through SecondMarket, private companies can opt-in to an organized, controlled private liquid environment that offers early investors and employee shareholders exit opportunity prior to an IPO or M&A event. Numerous high profile companies have traded over SecondMarket including Facebook, Tesla, Zynga and Twitter.
Government IOUs
SecondMarket’s government warrant market facilitates transactions in registered warrants (IOUs) issued by state governments. When the state of California issued warrants to its creditors in mid-2009, SecondMarket opened up a market place to facilitate the trading of government IOUs.
Investors
FirstMark Capital
SecondMarket closed a series A round from FirstMark Capital (previously named Pequot Ventures) in late 2007. Pequot was the $2 billion venture arm of hedge fund Pequot Capital Management, but in March 2008, it was spun off as a separate business and renamed. Over the past dozen years, the venture firm has opened seven funds, and it currently has $1 billion in actively managed and unallocated capital. The fund focuses on emerging media and advertising, data and analytics and infrastructure startups.
SVB Financial Group
SecondMarket's acquisition of InsideVenture led SVB to become an investor in SecondMarket in October 2009. SVB Financial Group provides financial services to emerging, growth and established technology companies in the life science, venture capital/private equity, and premium wine markets.
New Enterprise Association
SecondMarket's acquisition of InsideVenture also led NEA to become an investor in SecondMarket in October 2009. New Enterprise Associates (NEA) is a venture capital firm specializing in investments in venture growth equity at all points of developments, with a 60 percent focus on seed and start-up stage companies.
Horizons Ventures
SecondMarket secured a series B round from Horizons, the investment arm of Chinese business magnate Li Ka-shing, in January 2010.
Competitors
* Campbell Lutyens
* Cogent Partners
* GS TRuE
* GATE Technologies
* NASDAQ Portal Alliance
* NYPPEX
* Probitas Partners
* SharesPost.com
* Triago
* Zealous ATS
Key Board Members/Advisors
*Barry E. Silbert is the Founder and CEO
*Bill Seidman was a Senior Advisor to SecondMarket from 2008 until his death on May 13, 2009.
*Larry D. Lenihan, Jr. is the Founder, CEO, and Managing Director of FirstMark Capital.
*Chamath Palihapitiya is the Founder of The Social + Capital Partnership
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