SecondMarket Buys InsideVenture

How’s this for irony. InsideVenture, which has been helping late stage companies achieve liquidity in one of the worst public markets in recent memory, has been bought.

SecondMarket, which provides an online marketplace for private companies to trade its shares, has acquired InsideVenture, which helps match late stage companies that might otherwise go IPO if times were different, hook up with institutional investors.

The price of the all-stock acquisition is undisclosed. However, SecondMarket CEO Barry Silbert says  the purchase price constituted less than 5% of the company’s total equity.

InsideVenture’s backers, which includes New Enterprise Associates, will have a stake in SecondMarket as a result of the transaction. InsideVenture founder and CEO Mona DeFrawi will be joining the combined company “for the very least a transition period of at least three months, Silbert said.

Silbert set about building the exchange site SecondMarket four years ago. The organization then expanded its offerings to include private company shares and earlier this year raised venture funding from FirstMark Capital.

 

SecondMarket had several motives in acquiring InsideVenture, Silbert says. One particular draw was the network that the Menlo Park, Calif.-based company has built up over the past year, which includes institutional investors, investment banks, venture capitalists, and private company executives. Silbert says the company’s West Coast location was also appealing – SecondMarket had been looking to rent offices in the San Francisco Bay Area already.

 

Additionally, Silbert says, the InsideVenture acquisition should help his company develop a market for primary investments in private companies. Of the investors using the site who have indicated an interest in buying private shares, Silbert says, “pretty much all of them are indifferent if they’re buying shares on a primary or secondary basis.”

 

(Joanna Glasner contributed to this report.)