Brian Miller of Bloom Venture Partners on the Private Secondary Market and how to Unlock Liquidity for Employees and Early Investors

The Capital Stack

Brian Miller, Partner at Bloom Venture Partners, discusses the secondary market for private company shares and the challenges and opportunities it presents. He explains the difference between primary and secondary markets and how secondary transactions work. Brian also discusses the controversy surrounding Carta and the importance of secondaries for both employees and investors. He highlights the restrictions on selling equity and the treatment of early-stage investors. Brian shares his optimism for the future of the market and emphasizes the importance of trust and differentiation in the industry. You can watch/listen to the podcast on YouTube, Spotify, and Apple.

Takeaways

• The secondary market involves the transaction of shares that have already been issued by a private company.
• Companies and investors use the secondary market to provide liquidity to shareholders who want to sell their shares.
• The Carta controversy highlighted the misuse of customer information and led to the shutdown of their secondary business.
• Companies have different views on secondaries, with some seeing it as a positive benefit for employees and others concerned about control and optics.
• The majority of secondary transactions occur in later-stage companies that no longer need to raise capital.

Chapters

06:02 - Primary and Secondary Markets

07:30 - How Secondary Transactions Work

11:33 - The Carta Controversy

14:09 - Importance of Secondaries for Employees and Investors

18:46 - Restrictions on Selling Equity

20:03 - Treatment of Early-Stage Investors

23:34 - Current State of the Market

25:52 - Majority of Transactions in Later Stage Companies

26:27 - Challenges in the Secondary Market

28:03 - Differentiation and Trust in the Industry

29:12 - Personal Excitement and Future Outlook