A secondary market. From intention to certainty - Editorial by Ionut Patrahau
The secondary market has been an idea that persisted in our intentions. What is important for us is to offer access to this ecosystem for those who happen to need liquidity, and more so for ESOP program holders who might want to trade their rights through the platform, from time to time.
Editorial written by Ionuț Pătrăhău, Managing Partner & Corporate Development @ SeedBlink. In addition to his vast experience in banking, Ionuț Pătrăhău also worked in the medical services field, being former CEO of the private health network Regina Maria and co-founder of the Brain Institute, a neurosurgery center developed in partnership with the Monza Hospital.
Last month, SeedBlink's investment management team along with our product management colleagues, conducted the first pilot aimed to implement the potential share transfers between members of the same SPV, as part of a follow-on project.
This is an embryo of a future secondary market structure that will first need to go through the “Bulletin Board” phase – specified in the new European Regulation, before evolving to fully meet the needs of investors.
For the time being, any investor may decide to sell his shares in an SPV, at the price used in the follow-on round, if there are available buyers within the same SPV.
In the next phase of the project, all sell intentions will be posted in a bulletin board and the transactions between sellers and potential buyers will be carried out offline, at a mutually agreed time: monthly, quarterly, semi-annually or annually, or whenever this will be the case.
Although investments in technology startups are inherently illiquid and should therefore be considered from the outset as a medium- and long-term investments for reaching their scaling potential, we do not rule out the occurrence of some sell intentions when the investors face an unanticipated need for cash.
This intention became gradually a reality – and our plans started to materialize – when the activity of our crowdinvesting platform activity converged with the European regulation that came into force, just a few days ago. So the product started to take shape and even be tested with prototype iterations, to quickly validate user feedback & experience.
For SeedBlink is not paramount to have an intensively used secondary market at the moment, as we think that, at least in the first years of the platform, it is unlikely to have many sellers from successful startups, just as improbable to have buyers for the startups that are not raising funds periodically.
What is important for us is to offer access to this ecosystem for those who happen to need liquidity, and more so for ESOP program holders who might want to trade their rights through the platform, from time to time.
We are now offering a secondary pilot product destined to the members of the SPV, for the case there is a follow-on round. The 4 follow-on rounds that happened in the recent months showed an increase in MOIC (Multiple on Invested Capital) from x1.71 the lowest, to x2.79 the highest.
We will keep our investors updated and we’d also appreciate any feedback we receive about our plans.
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By Ionut Patrahau
PublishedNovember 22, 2021