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The Capital Stack

Brian Miller of Bloom Venture Partners on the Private Secondary Market and how to Unlock Liquidity for Employees and Early Investors

Feb 13, 2024
32:22

Brian Miller, Partner at Bloom Venture Partners, discusses the secondary market for private company shares and the challenges and opportunities it presents. He explains the difference between primary and secondary markets and how secondary transactions work. Brian also discusses the controversy surrounding Carta and the importance of secondaries for both employees and investors. He highlights the restrictions on selling equity and the treatment of early-stage investors. Brian shares his optimism for the future of the market and emphasizes the importance of trust and differentiation in the industry. You can watch/listen to the podcast on YouTubeSpotify, and Apple.

Takeaways

  • The secondary market involves the transaction of shares that have already been issued by a private company.
  • Companies and investors use the secondary market to provide liquidity to shareholders who want to sell their shares.
  • The Carta controversy highlighted the misuse of customer information and led to the shutdown of their secondary business.
  • Companies have different views on secondaries, with some seeing it as a positive benefit for employees and others concerned about control and optics.
  • The majority of secondary transactions occur in later-stage companies that no longer need to raise capital.

Chapters

06:02 - Primary and Secondary Markets

07:30 - How Secondary Transactions Work


11:33 - The Carta Controversy


14:09 - Importance of Secondaries for Employees and Investors


18:46 - Restrictions on Selling Equity


20:03 - Treatment of Early-Stage Investors


23:34 - Current State of the Market


25:52 - Majority of Transactions in Later Stage Companies


26:27 - Challenges in the Secondary Market


28:03 - Differentiation and Trust in the Industry


29:12 - Personal Excitement and Future Outlook

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