They might have been a little late to the party, but it’s still only just begun.
Xpert Financial, which will soon launch a secondary shares trading platform similar to that of SecondMarket and SharesPost, is considering potential backers for a new round of capital. The company, which has already raised between $3 million and $5 million, may seek to double that in its next round, CEO Thomas Foley said, as it challenges established competitors and eyes overseas markets for expansion opportunities.
Soon, the company will reveal the names of a handful of late-stage start-ups that have approved their shares for trading on its exchange and launch a private stock exchange. Foley declined to name the participants (he expects up to a few dozen will approve shares for trading on Xpert Financial this year), but said an announcement is forthcoming.
Xpert Financial has been approved by the Securities and Exchange Commission to run an alternative trading system for private company securities, and it also will operate direct-to-investor fundraising platform for companies raising capital at the Series C stage and later, similar to plans SecondMarket and SharesPost revealed. Part of Xpert Financial’s existing capital backing can be traced to veteran VC investors Tim Draper and Bill Draper; each personally invested in the company.
Companies have lashed out at secondary exchanges in the wake of unapproved stock transactions, and some, like Twitter, have succeeded in preventing their shares from being sold on private stock exchanges. Xpert Financial has a plan for that: Foley told peHUB that the only stock Xpert Financial will carry is that which is approved for trade by the company prior to being auctioned. Other private stock exchanges have made similar pledges, however, details regarding how companies approve stock sales through secondary markets remain murky.
Xpert Financial will likely have a smaller community of site members than its competitors. Unlike SecondMarket and Sharespost, which have opened portions of their sites to investors that do not have accreditation to buy shares, Xpert Financial is only allowing accredited investors into their site. The only exception will be for shareholders looking to unload shares, who are not accredited—and their access will still be restricted, Foley said.
Research—which will include reports similar to those posted at SharesPost and SecondMarket—will be complemented by data offered by the companies that have approved the buying and selling of their shares on Xpert Financial, Foley said.
“We have research partners – and our partners are the only ones that have access to the companies’ actual information,” Foley said, though he declined to identify Xpert Financial’s research base. “The other groups have research based on unconfirmed information – we have information from the companies and research based on company [data].”