Secondaries

More info about what are "Secondaries"

In a private secondary transaction, the seller is the shareholder, not the company. This is not to be confused with a secondary offering in primary markets (they are both referred to as "Secondaries"). The reason the private secondary market exists is because companies are large enough and growing enough to evolve into a state where the market exists naturally. For example, new investors do not receive sufficient supply in the primary financing rounds offered by the company, or none are available. Those investors seek supply in secondary markets. Early investors who have been shareholders for 5-10 years may want liquidity, and this is where those interests cross. Secondary private markets are the matching or crossing of those interests which create liquidity.

Post Growth - Late Stage

Post growth, late stage private companies are attractive targets for investors, as they typically have a proven track record of success. Employees, and early investors would like liquidity in these names, and this is how the secondary market for late stage private companies forms. Venture Capital Cross is active in this market and we have developed an algorithmic process based on firm orders and next steps.

For Shareholders

Do you own shares in late stage, visible private companies with valuations of 500m or greater? Venture Capital Cross can match your shares with a buyer via our network. If you own shares in any private company they may be eligible, please reach out for a free evaluation.

For Investors

Do you have demand for late-stage private companies? We have access to more than 1,000 names of private companies with valuations greater than 500m (Unicorns and Soonicorns), available either via direct share transfer or special purpose vehicle (SPV). Investors must be Accredited.

Private Markets are fragmented into micro segments, which don't always mix well together. Venture Capital Cross (VCC) bridges the gap between the West Coast / VC mentality and the East Coast / PE mentality, providing innovative ways to create liquidity in Private Markets where everyone is happy or "Win Win" transactions. We believe in the ethical value trade, where both sides are winners — employees of mature late-stage companies are happy to get a check, while investors are happy to invest in high-growth companies at this early stage and (usually) receive a decent multiple for taking the risk. This includes activities across Seed Funding and Crowdfunding, Primary Financing Rounds, Private Placements, and Secondary Market Transactions.

For Shareholders

Employees, Partners, Investors --

Whether you are an early investor, employee, or other type of shareholder - Venture Capital Cross can help sell your shares. Private Markets are unlike public markets in many ways, but the most significant difference is there is no guaranteed liquidity. The steps are to collect your KYC including Photo ID, Proof of Shares, and obtain an authorization from you to sell your shares in the form of a Firm Offer Ticket or Selling Agreement (Agency Agreement). All securities are processed by R.F. Lafferty & Co. Inc. - counterparties are given the choice to complete the KYC form, or to open a brokerage account (the information required is similar).

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See the above explained in a Video on YouTube (opens new window)

‍Preliminary Questions

1. Do you know if you are able to sell your shares? Companies all have transfer restrictions, but you need to check your contract. If the language says that it requires board approval, that's a standard ROFR process, it means you can sell them. That's what VCC will help you with. Some companies have language that any transfers are strictly forbidden. Transfer friendly companies should give you a heads up if you're allowed to sell them on the secondary market or not. Another category of companies provides tender offers for employees where investors buy shares of employees that want to participate. Ask your company or if you cannot, you can ask us. If transfers are strictly forbidden, you can sell your shares via Forward contract if you are an Eligible Contract Participant.

2. Do you have shares or options? You can only sell shares.

3. What is the difference between the VCCross Portal and a brokerage account at RF Lafferty?Venture Capital Cross is a DBA of R.F. Lafferty & Co. Inc. for the purposes of exchanging information about Venture Capital Deals, ranging from early stage private placements to late stage secondaries.

Next Steps

1. Sign up for the Venture Capital Cross Portal by clicking here to sign up, and complete the onboarding KYC.

‍2. Upload or Email your Proof of Shares, Shareholder Agreement, and Photo ID. They will be reviewed and if they are legitimate they will be approved.

Once these steps are complete, your order to sell will be anonymously and diligently marketed across a wide book of business including investment banks, brokers, funds, family offices, investors, and pension funds looking for investment opportunities.

Setting your expectations

Private Markets are generally one sided; there are all buyers or all sellers. In the case your company is in high demand, our job will be more clerical - handling the paperwork in the correct and prescribed manner, ticking all the right boxes, following company policy and US Regulations. In the case where we have an existing buyer, the process is faster, and generally more smooth.If your company is not in demand, the strategy is to target investors of similar companies; i.e. if you liked Kraken you'll love Chainalysis. This doesn't guarantee a sale but it's the best effort we can make to match your supply with demand.

Frequently Asked Questions

- No transaction, no fee. A success fee is charged only when the transaction is closed (Settled).
- VCC does not require exclusivity, however, once we have your order we kindly ask to go quiet on other fronts, in order to avoid negative market feedback. See this video on The Value of Being Quiet. Shopping your bid or offer guarantees a worse price; this is counterintuitive but it is a fact in private markets due to market fragmentation and micro architecture.
- Note that it is not possible to sell options, only shares. If you hold options, you must convert them to shares first.
- Company transfer restrictions vary. All companies have Right of First Refusal (ROFR) and must be noticed, however, some companies are transfer friendly and some not.
- Any counterparty in a Forward transaction must be an E.C.P. Eligible Contract Participant. See what is an ECP. This definition includes sellers of Forward contracts.
- Prices displayed on data websites do not necessarily indicate a market price for shares.
- Average settlement time for direct transfer is 30-60 days. SPV transactions settle on average from 2/3 days to 2 weeks depending on the buyer's ability to review documents.