Livestream Considering Raising Funding on SecondMarket

Livestream, the four-year-old live streaming company with the perfectly descriptive name, is at an interesting place in the life of a start-up. It has raised a total of about $13 million in funding from Gannett and individual investors and has about 100 employees. It expects $12 million in revenue this year, on pace to grow 100 percent from last year. And it’s had a smattering of break-even months, and anticipates profitability next year.

But now CEO Max Haot (pictured at right) is exploring where he might find some “growth capital.” He said in an interview this week he “doesn’t have the appetite” to give venture capitalists seats on his board and partial control of the company, if he can avoid it. So he’s been in talks with SecondMarket about raising funding by selling shares of Livestream to its buyers.

What Haot is talking about sounds a lot like an IPO, but shares would presumably be available only to SecondMarket’s accredited investors and would not be actively traded. (The actual details and regulatory compliance issues are far from being worked out.)

SecondMarket is most famous for its private company market, which arranges sales of stock owned by investors, employees and/or former employees of fast-growing companies that would prefer not to go public. As this larger phenomenon is new, evolving and uncomfortable for some (including, perhaps, the SEC), SecondMarket portrays itself as the upstanding, controlled and company-friendly option.

Haot said he envisions putting a piece of Livestream on SecondMarket early next year, when he thinks his company will have a $20 million run rate.

And while the main purpose of the offering would be a primary rather than secondary sale of stock, Haot would probably allow employees to sell some shares as a motivational bonus. (Haot said neither he nor other employees have “taken money off the table” by cashing out some of their holdings, as many tech founders do these days, especially in later funding rounds.)

Asked whether SecondMarket was considering adding primary funding rounds to its business, the company replied with the following statement: “The ability to use technology to more efficiently raise capital is an intriguing prospect for us.  We’re currently evaluating the opportunity and how it could be implemented.  However, we cannot comment on specific companies as it could violate the SEC’s prohibition against general solicitation.”

To be clear, Livestream and SecondMarket are in exploratory talks; I approached Haot to ask what he thought about secondary markets and was surprised to hear that this scenario was on his mind.

Haot said he does hope to take Livestream public eventually, but that would be at least three or four years from now.