Hot Startups’ Stockholders Turn to Secondary Markets; Some Say in Swerve from Fiscal Cliff

Stakeholders in hot startups like Tumblr, Etsy and Zendesk are taking to secondary markets to unload stock before the end of 2012, sources tell peHUB. Despite how some secondary market plays for investors—like Groupon, or Zynga—performed, there is still an abundance of appetite for pre-IPO stock.

Some say that secondary markets are benefiting from investors’ queasiness regarding how the United States government will re-adjust its tax collection policies in 2013.

“There is an expectation that the capital gains rate will go up, regardless of whether we go over the fiscal cliff,” one secondary market source told peHUB.

Other sources peHUB spoke with chalked the recent spate of secondary market stock sales up to VCs looking to satisfy limited partners with cash returns before year-end.

Recently, secondary market buyers have snapped up stock in startups including Tumblr, Etsy, Zendesk (which, peHUB reported last month, will chart its path to public markets in 2013) and, multiple sources confirm to peHUB.

When Tumblr was asked by peHUB whether the company’s early-stage investors were seeking liquidity on secondary markets, a representative responded: “We don’t comment on financial matters.”

According to Thomson Reuters’ data, backers in New York-based Tumblr include Spark Capital, Sequoia Capital and Union Square Ventures. The company has raised more than $125 million, data shows.

Secondary market investors also told peHUB they had opportunities to buy shares of Etsy, the Brooklyn-based e-commerce site. The company’s investor base includes a number of angel backers, Accel Partners and Union Square Ventures; Etsy has raised more than $90 million to date, according to Thomson Reuters data.

PeHUB reached out to several of the early-stage investors backing these startups, none were willing to comment.

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