Start-Ups: a New Market for Private Companies
By Anthony Jerdine | July 26, 2016 — 8:21 AM EDT
Transparency has always been an obstacle in terms of bringing investors and private companies together. By law, any company that is privately held has no obligation to make their finances open to the general public.
That is all about to change, thanks to Equidate, a platform for trading shares of privately held companies. The San Francisco company announced yesterday that they had launched a new online platform that would help bring more transparency to the private market.
Founded in 2013, Equidate makes it possible for employees of private companies to convert their illiquid shares into cash. On the flip side, they allow accredited investors to get in on companies during a start-up’s high growth time period.
According to the New York Times Equidate currently has approximately $750 million worth of shares listed for sale on their marketplace.
Thousands of Companies
This new platform will give the public an inside look at proprietary data on thousands of private companies. This data includes things like stock charts, investors, valuations, and more. This is information that has historically been unavailable or extremely expensive for the average person to acquire for making decisions on investments in private companies such as Uber and Snapchat.
“Building ‘the stock market for private companies involves more than simply building a website and listing deals. We’re launching the new Equidate to add value to the entire ecosystem,” said Founder and Co-CEO Sohail Prasad. “By offering this information for free, we are empowering people and bringing more transparency to the opaque world of private tech investing.”
The new platform will also provide employees and investors a current valuation of their shares. Up until now, both were often in the dark when it came to how much their equity shares were actually worth.
“Often times, employees who are not well-informed about what their holdings are worth have trouble making decisions about buying and selling, life events, and taxes because they don’t know how it will affect their overall financial status. Even early investors can be out of date,” said Equidate Founder and co-CEO Samvit Ramadurgam. “By joining Equidate, members can securely store financial documents and data, and the platform’s algorithms automatically analyze and update their portfolio dashboard.”