SECONDMARKET RELEASES Q1 2011 PRIVATE COMPANY STOCK REPORT

05/17/2011

SECONDMARKET RELEASES Q1 2011 PRIVATE COMPANY STOCK REPORT

SecondMarket completed $115.4 million in private company stock transactions in Q1 2011. For detailed data and insights on last quarter’s transactions:

Facebook dominated the list for the third consecutive quarter, holding a distant lead in number of SecondMarket participants watching the company.
Twitter is the runnerup and successfully held the second spot for the second consecutive quarter.
Groupon, which debuted at #6 in Q4 2010, moved into the third spot last quarter.
Foursquare, Pandora, Skype and Gilt Groupe were new to the list.

The ranking showed that investors remain interested in companies behind widely used social media.

The “Rising Stars” list tracks private companies on SecondMarket with the largest quarter-on-quarter increase in total SecondMarket participants who “watch” the companies. The number of SecondMarket participants worth watching:

Foursquare, the location-based mobile platform leader, jumped 2950%.*
Dropbox, an online file hosting service, was second, with 1640% increase in watchers.
Spotify, the music & entertainment startup.
Skype, communications company.
Gilt Groupe, the ecommerce firm.

The uptick for these companies was driven, among other factors, by meaningful press in their respective market segments. For example, investor interest in Spotify grew upon news of its possible expansion from Europe to the US. HauteLook being acquired by upscale department store Nordstrom increased SecondMarket participant interest for Gilt Groupe.

*Percentage increases were dramatically higher than past quarters, due to the launch of SecondMarket’s new platform in March 2011.

This list tracks private companies being watched for the first time by SecondMarket participants.

In Q1 2011, the private company new to being watched and with the most watchers were:

Hulu, the LA-based startup is the second largest online video provider after Google’s Youtube, supplying web video services for NBC Universal, Disney and others. The company is being watched on SecondMarket by over 450 participants.
LivingSocial, a top competitor to Groupon, gained interest for the first time last quarter by SecondMarket participants.
Quora, an emerging popular Q&A website.
Square, a mobile payments startup.
Alibaba Group, the China-based e-commerce firm, rounded out the list of Top 5 “Newbies.”

Learn more about these private companies on SecondMarket’s new platform, including detailed company history, market data for eligible investors and more.

Buy / Sell Demand was comparable quarter-on-quarter. Consumer Products and Services still garnered the most attention in Q1 2011, with buy-side demand in that category remaining more than double that of the sell-side. The category was driven by continued enthusiasm from investors for social network companies.

Note: “Buy-side” refers to parties who have indicated interest in purchasing a company’s stock and “sell-side” refers to parties who have shares for sale. If a buy order is met or a seller does not wish to sell any more stock, those parties are removed from the data set.

Please note: All numbers have been rounded to the nearest percentage. Some graphs may not add up to 100%.

By Industry, Consumer Products and Services companies dominated in Q1 2011, accounting for 95% of private stock transactions during the quarter, followed by Software (4%) and Clean Tech (1%) companies. This marked a shift from Q4 2010, when Consumer Products and Services made up only 56% of completed transactions.

Please note: All numbers have been rounded to the nearest percentage. Some graphs may not add up to 100%.

The Buyer Types in completed transactions shifted dramatically in Q1. High net worth individual investors completed nearly 60% of Q1 transactions. By contrast, venture capital funds led the buyer pool in Q4 2010, with over 40% of completed transactions.

Several factors drove an increase in market participation from HNWI investors last quarter. First, private companies continued to become more open to individual investors, minimizing usage of Right of First Refusal (ROFR) and allowing more individual investment purchases to close. Second, due to efficiencies implemented in SecondMarket’s auction and settlement processes, our Private Company Market was able to lower the minimum purchase amount for many auctions, enabling more HNWI investors to participate.

Please note: All numbers have been rounded to the nearest percentage. Some graphs may not add up to 100%.

Composition of Seller Types was more heterogeneous in Q1 2011. While Ex-Employees continued to constitute the majority of sellers, founders and outside investors sold shares during the quarter for the first time in the past 12 months.

Please note: All numbers have been rounded to the nearest percentage. Some graphs may not add up to 100%.

COMMENTARY: Looks like SecondMarket founder Barry Silbert and his trading elves at SecondMarket, the high flying secondary market broker for private company stock, has been busy. However, I noticed that the Q1 2011 results did not reflect sales of Facebook shares totally $1.5 billion to Goldman Sachs and Digital Sky Technolgies.