The secondaries market is hot right now—for some startups, that is.
“There’s about 1,200 unicorns in the world right now—and only 25 of them have actual liquidity in the secondary market,” says Tom Callahan, CEO of Nasdaq Private Market, the liquidity company that spun out from the Nasdaq stock exchange in 2021 and just recently launched a secondary trading platform where startup employees can sell shares.
It’s the usual suspects that are getting the most attention: SpaceX, OpenAI, Databricks, Anthropic, Groq, Perplexity, Stripe.
But what about all the rest of them? There are a few reasons no one is buying their shares on the secondary market. For one, private companies get to approve or deny these secondary trades—and some companies never allow it, Callahan explains. But the other thing at play is a lack of information: If you’re not an investor with a board seat, odds are you don’t have access to management or a sense of the company’s financials.
“If you’re just trying to establish a new position in a company, you have no access to any of that information, so you’re really blind,” Callahan says. This can be a risky bet for an investor if a company hasn’t had a formal liquidity event since venture boom times—as their valuation may not be clear. And it makes it harder for buyers and sellers to come to an agreement on a fair price.
For those couple dozen companies that are trading, Callahan says that interest has “never been higher” from investors. M&A deals have slowed down because of regulatory challenges from the Federal Trade Commission, and the IPO market is still pretty quiet. Meanwhile, VC firms have funds that are nearing the end of their life cycle and need exits so they can distribute money back to limited partners. There’s a whole lot of investors who would love to scoop up their shares in promising companies at a potential discount.
The problem is: These kinds of transactions are concentrated in a few companies. So there’s still some uncertainty about where valuations really stand across the private markets. Callahan expects that, as more unicorns do primary rounds and tenders, this will really shift.
“I think the stigma of the down round is kind of over, because so many companies have done them,” Callahan says.
That’s already happening to some extent with tender offers. While companies didn’t do them very much in 2022 or 2023, Callahan said there has been a “screaming rebound” this year. “We did more tenders by May of 2024 than we did in the full year of 2023,” he says.
It always takes the private markets a little while to catch up. But it looks like it’s finally happening.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
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Nina Ajemian curated the deals section of today’s newsletter.
VENTURE DEALS
– Lightmatter, a Mountain View, Calif.-based photonic supercomputing developer, raised $400 million in Series D funding. T. Rowe Price Associates led the round and was joined by existing investors Fidelity Management & Research Company and GV.
– Alchemy, a San Francisco-based in-house pharmacies developer for HIV clinics, raised $31 million in seed funding. a16z Bio + Health led the round and was joined by Earvin “Magic” Johnson, Sandberg Bernthal Venture Partners, Banc of California, and existing investors Twine Ventures, Springbank, and AlleyCorp.
– Fable, a Toronto-based digital accessibility platform, raised $25 million in Series B funding from Five Elms Capital.
– ForceMetrics, a Denver-based decision-assist public safety platform for first responders, raised $22 million in funding. Costanoa Ventures led the round and was joined by the Hobson Lucas Family Foundation, Stand Together Venture Labs, GovTech Fund, and others.
– Tebi, an Amsterdam-based financial platform for independent hospitality and retail businesses, raised €20 million ($21.7 million) in Series A funding from Index Ventures.
– SynthBee, a Fort Lauderdale-based computing intelligence platform developer, raised $20 million in seed funding from Crosspoint Capital Partners.
– Hello Cake, a Los Angeles-based sexual wellness brand, raised $18 million in Series B funding. Silas Capital and Strand Equity led the round and were joined by StepStone Private Venture and Growth Fund, AF Ventures, Bullish Brand Partners, and DCND Ventures.
– Autone, a London-based AI-powered retail inventory management platform, raised $17 million in Series A funding. General Catalyst led the round and was joined by existing investors Speedinvest, YCombinator, Seedcamp, angel investors, and others.
– Treehouse, a San Francisco-based software-enabled installation platform for electrification projects, raised $16.6 million in Series A funding. Flourish Ventures led the round and was joined by Eaton, Veriten, MassMutual Ventures, existing investors CarMax, Montage Ventures, Acrew Capital, and others.
– Najar, a Paris-based SaaS investments management and optimization company, raised €15 million ($16.3 million) in Series A funding from 13books Capital, Portage, Tomcat, and existing investors.
– Beacon AI, a San Carlos, Calif.-based aviation intelligence technology developer, raised $15 million in Series A funding. Costanoa Ventures led the round and was joined by Scout Ventures, Sam Altman, and JetBlue Ventures.
– Sunbird Bio, a Cambridge, Mass.-based blood-based diagnostic tests developer, raised $14 million in funding from Eli Lilly, EDBI, and existing investors ClavystBio, Polaris Partners, and S32.
– Herald, a New York City-based digital infrastructure provider for commercial insurance, raised $12 million in Series A funding. Lightspeed Venture Partners and Brewer Lane Ventures led the round and were joined by Afore Capital and Underscore Venture Capital.
– Agtonomy, a San Francisco-based AI automation software developer for agriculture and land maintenance, raised $10 million in Series A funding. Autotech Ventures led the round and was joined by Rethink Food, Allison Transmission, Black Forest Ventures, and existing investors Toyota Ventures, Flybridge, and Cavallo Partners.
– Cambri, a Helsinki-based AI-powered insights and innovation platform, raised $8 million in funding. Octopus Ventures led the round and was joined by S4S Ventures, existing investors OpenOcean, Spintop Ventures, and The 98.
– Simplismart, a Bangalore, India-based inference engine, raised $7 million in Series A funding. Accel led the round and was joined by Shastra VC, Titan Capital, and angel investors.
– Tako, a San Francisco-based AI search engine for data visualization, raised $5.8 million in seed funding. Kevin Hartz and Ramtin Naimi led the round and were joined by Stanley Druckenmiller, Kevin Warsh, Gokul Rajaram, and others.
– SuppCo, a New York City-based supplement tracking and optimization platform, raised $5.5 million in seed funding. Union Square Ventures and True Ventures led the round and were joined by Box Group, Compound, and others.
– Paladin, a Houston-based drone as first responder solution provider, raised $5.2 million in seed funding. Gradient led the round and was joined by Khosla Ventures, 1517, Toyota Ventures, and others.
– Abel, a San Francisco-based AI-generated body camera footage reports company for police, raised $5 million in seed funding. Day One Ventures led the round and was joined by Y Combinator, Long Journey Ventures, and others.
– Concourse, a New York City-based AI analysts developer for finance teams, raised $4.7 million in funding from a16z, Y Combinator, CRV, and BoxGroup.
– Neuphonic, a London-based text-to-speech technology developer, raised £3 million ($3.9 million) in pre-seed funding. Moonfire VC led the round and was joined by Tiny VC, Salica Oryx Fund, and Cur8 Capital.
– Edgee, a San Francisco-based open source edge computing platform, raised $2.9 million in pre-seed funding from Serena and VentureFriends.
– Keep, a Tel Aviv-based open-source AIOps platform, raised $2.7 million in pre-seed funding. Runa Capital led the round and was joined by Firestreak, Y Combinator, and angel investors.
– BackOps.ai, a San Francisco-based AI-driven supply chain logistics and operations automation platform, raised $2 million in pre-seed funding. Gradient led the round and was joined by 10VC.
– Stema, a Milan-based career copilot platform for engineers, raised €1.6 million ($1.7 million) in funding. United Ventures led the round and was joined by Eden Ventures, Club degli Investitori, and Octopus Ventures.
PRIVATE EQUITY
– RESA Power, backed by Investcorp, acquired Prime Engineering, a Victoria, Canada-based electrical design, engineering, supply, and services business. Financial terms were not disclosed.
– Tekmetric, backed by Susquehanna Growth Equity, acquired Shopgenie, a Phoenix-based CRM and end-to-end customer experience solutions provider for auto repair shops. Financial terms were not disclosed.
OTHER
– Flock Safety acquired Aerodome, a Los Angeles-based drone as first responder technology developer. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– Forbion, a Naarden, The Netherlands-based venture capital firm, raised €1.2 billion ($1.3 billion) for its third fund and €890 million ($968 million) for its seventh fund focused on life sciences companies.
PEOPLE
– J.P. Morgan Private Capital, the New York City-based venture and growth equity investment arm of J.P. Morgan Asset Management, added Paris Heymann as a co-managing partner. Previously, he was at Index Ventures.
– Moxxie, a San Francisco-based venture capital firm, added Ashwin Lalendran and Chris Wu as investors. Previously, Lalendran was at Phantom Auto and Wu was at Hims & Hers.
– Percheron Capital, a San Francisco-based private equity firm, added Megan Lundy as a managing director and head of investor relations. Previously, she was at Audax Private Equity.
