Equidate has raised an undisclosed amount of seed funding. The investors included Structure Capital and Quora co-founder Charlie Cheever. Also, the company has named John-Paul Teutonico as its head of strategic operations. Teutonico is the former chief administrative officer at SecondMarket. Equidate is a marketplace for startup shares.
San Francisco, California – June 16, 2014 – Equidate, Inc., the marketplace for pre-IPO company shares, today announced its seed funding, a key hire, and the launch of its web-based platform.
The company, which has been in private beta since January, recently closed a seed round of an undisclosed amount with investors including Scott Banister (an early investor in PayPal, Uber, Zappos), Charlie Cheever (co-founder of Quora), and Structure Capital, amongst a number of angel investors. “Our investors have had roles as shareholders, investors, and founders of private companies. Their experiences on each side of the table offer us valuable perspective towards crafting a solution that benefits all key stakeholders,” said Sohail Prasad, Equidate’s CEO.
The company also announced a key hire. John-Paul Teutonico, former Chief Administrative Officer at SecondMarket, will become Equidate’s Head of Strategic Operations. Prior to SecondMarket, Teutonico was with Goldman Sachs and Bear Stearns. Prasad notes, “JP has given us a lot of insight into things we can do that weren’t necessarily right for SecondMarket at the time.” SecondMarket launched in 2004 as a way for companies to manage a secondary offering for their shareholders.
Equidate, alongside a registered FINRA member broker-dealer, has begun bringing on shareholders and investors to its web-based platform. For investors, Equidate turns traditional investing on its head by offering the ability to invest in fast-growing private companies before they go public. “What we really want to do is even the playing field for investors. Most people aren’t Merrill Lynch clients with tens of millions under management, so they weren’t even able to invest at Twitter’s original IPO price of $26 per share. Instead, the average retail investor was only able to get in at around $45 per share after the stock started trading, when much or all of the initial gains were already priced in” said Prasad. “Instead, Equidate offers investors to get access to these high-growth companies even before their IPO.” For the time being, those interested in getting in on the Equidate platform will need to be accredited investors with a net worth over $1 million or yearly earnings over $200,000.
As an employee, finding a way to liquidate even a small number of shares in a growing startup is near impossible. The time employees have to wait until a liquidation event such as an IPO has also been steadily increasing: according to Ernst and Young, at the end of 2013 the median time from initial equity financing to IPO was 9.4 years, up from 6.4 years in 2011. Platforms like SecondMarket have given employees at some companies an outlet to a private market, but most startups have not readily adopted this model. Prasad hopes that shareholders can achieve liquidity through Equidate while private companies further delay time to IPO.