In a Post-Facebook IPO World, SecondMarket Evolves Away From Internet Companies
Among many Internet investors in Silicon Valley, SecondMarket is a bad word these days. The company is closely associated with secondary stock trading of companies like Facebook and Groupon over the past few years, at prices that were out of whack with what the public markets will now pay.
But SecondMarket isn’t dead yet. It’s not necessarily zooming up the growth charts, but it’s not dead. The company has done $418 million in business in the first three quarters of this year, down 3 percent from last year. However, the demographics of its customers are pretty dramatically different.
SecondMarket’s largest category of clients is now consumer electronics; it was by far the biggest in the third quarter, with 75.8 percent.
Behind that are e-commerce and financial services; and behind that, the formerly giant category of consumer Web and social media, according to a quarterly report released today.
Instead of former employees, SecondMarket’s largest selling contingent is now current employees.
Until the third quarter, there were always more former employees than current employees selling on SecondMarket — and, in 2010 and 2011, that was as high as 90 percent of sellers. In the third quarter of 2012, 75 percent of sellers were current employees.
“Companies are working with SecondMarket to incentivize, motivate and reward their current employees without having to face the wrath of the public markets,” said SecondMarket spokeswoman Aishwarya Iyer.
Iyer called employee liquidity programs “morale boosters.”
The demographics of the typical SecondMarket company has changed, as well. In the third quarter, the median valuation on SecondMarket was $538 million. That’s much smaller than companies like Facebook and Groupon in their private-market heydays.
The median SecondMarket company in the third quarter had raised $145.7 million, and had 609 employees who have been there for 7.5 years. The median selling program was $7.9 million per company.