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Airtime, Warby Parker, Stripe, Factual are newest companies gaining interest from investors
If you are anything like me, you didn't even know how hot the SecondMarket was until everyone was clamoring to get a piece of Facebook as it rocketed toward its now infamous IPO.
Other social networks and Web tech companies like Zynga were also big on the secondary market prior to hitting the public trading floor, but the lackluster and, at times, completely sad performances in trading have left some wondering whether the secondary market is any real reflection of how these companies are doing, or just an early self-congratulatory trading party.
Zynga, at one point, was trading on the secondary market near $20 and Facebook held steady for a while at $35, while now Zynga shares are trading at a paltry $3 and Facebook struggles to hold strong at $21.
So SecondMarket took a look at the privately-held companies that continue to offer shares before going public and found that these, mostly Web tech-centric companies have an average valuation of $329 million and about 200 employees.
Despite all the concern and erratic trading on consumer tech this year, transactions on the SecondMarket’s platform in the first half of this year are still up 27% year-over-year at $341 million, with gaming companies comprising 48.3% of action selling on the platform.
In terms of the buyside demand, investors were most interested in consumer Web and social media startups with $265 million for the first half of this year. Enterprise software saw $50 million in interest, then mobile startups saw about $38 million in demand.
When you look at individual companies showing some up-and-coming promise, the standouts include Viddy, Warby Parker, SocialCam, Airtime and Stripe.
Sean Parker and Shawn Fanning’s video chat startup Airtime attracted the most new interest from investors in terms of followers. The extremely new company only has around 100,000 monthly active users, according to app tracking service AppData, but is gaining a fair amount of viral buzz as well as interest in its liquidity
SocialCam also saw a lot of interest from those following and trading on the SecondMarket platform, and was recentlytly so buzz about that it was acquired by Autodesk for $60 million.
When SecondMarket looked at who was taking part in this tech-trading action it saw that hedge funds comprised the lion’s share of transactions by dollar value, with 47.9%. Family offices followed with 21.5% of the trading, then asset managers (15.3%), issuers (8.9%), accredited individuals (6.0%), and private equity funds (0.3%) among the investors who joined the companies’ shareholder bases.
This trend of hedge funds, asset managers and the supremely rich getting in on the ground floor has been the fuel behind the JOBS Act initiative that allows smaller investors to get in early on these tech developments -- it will be interesting to see if these SeondMarket numbers change dramatically post JOBS Act.
When looking geographically at who is investing in these early-stage tech companies on SecondMarket, it oops much like a map of tech HQs. Most of the investments and demand originate in New York, California and Texas.
On the watch list, SecondMarket points out that Airtime saw a 208% increase in people watching the company for Q2, followed by Warby Parker (+127.9%) and Stripe (+117.2%). SoCal-based open-data platform, Factual, and Palo Alto-based creator of the Learning Thermostat, Nest, also graduated from the Q1 Newbies and made their debuts to the Q2 Rising Stars.
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.