Behind the Money
An IPO drought pushes investors to a murky marketplace
Jan 17, 2024
This podcast discusses the rise of venture secondary markets as IPOs and acquisitions slow down in Silicon Valley. It explores the challenges and differences of trading in these markets, the creation of Carter X to simplify share selling, a scandal involving startup Carter, and the lack of transparency in the trade and venture secondaries market.
18:28
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Quick takeaways
- The slowdown in initial public offerings and acquisitions has created a demand for the venture secondary market, where investors and early employees can trade stakes in privately-held companies.
- The venture secondary market lacks transparency and regulation, making it potentially prone to manipulation and fraud.
Deep dives
Importance of company stock in attracting employees
Silicon Valley startups have been using company stock as a major incentive for attracting new employees. Stock options are often seen as more valuable than salary since they have the potential to turn into significant wealth if the company succeeds. However, the recent slowdown in the venture capital market, with higher interest rates and reduced IPOs, has caused a liquidity problem for employees who hold stocks in privately held companies. This has led to a growing demand for alternative solutions such as the venture secondary market, where professional investors and employees can trade stakes in companies before they go public.
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