Let’s be honest, early-stage start-upin’ ain’t easy. It’s a grind, and maybe you’re an accelerator, an angel investor, or even an early employee with shares that either wants to or need to cash out?
But the company you’re in bed with hasn’t reached any type of liquidity event, i.e. an IPO, an acquisition, or a major funding round that sees a new investor offer to buy you out. So you’re stuck, right? Well, not exactly.
You’ve either got the old school method of, “I know a guy who knows a guy that knows a guy that might take those off your hands,” a lengthy process at best, or, you need some liquidity tomorrow; enter secondary marketplace trading, e.g. Funderbeam.
A Way to Float
Founded in 2013 by Kaidi Ruusalepp and Urmas Peiker, Funderbeam closed a Tim Draper-led financing round at the end of March that saw $4 million flow into their accounts and is helping to drive the platform forward.
One of those moves forward is bringing institutional partners on board. In a mutually beneficial partnership, Funderbeam has revealed their new partnership with Tallinn-based B2B accelerator Startup Wise Guys.
"It takes years to build a truly modern secondary marketplace for private companies connecting global investors and traders. One has to construct the product with digital infrastructure, secure legal framework and licenses, and business departments supporting the global reach. The hard work is done, and we are proud to scale and secure the first global partnership with Startup Wise Guys,” comments Ruusalepp.
Now if you’re thinking, “but wait, can’t startups simply go straight to Funderbeam themselves?”, well then you’d be in my gang.
When asked about this, Kaidi explains, “Some SWG companies are already on Funderbeam. The question is - is the route to our marketplace initiated by the company without the involvement of SWG (and similar institutions) or is there a wider and coordinated partnership? We both believe that the coordinated partnership will lead to broader benefits to all parties - SWG, their companies, wider investors and Funderbeam.”
Sur La Table
Startup Wise Guys is able to bring some 220 early-stage portfolio companies, most have which have been invested in within the past two years, to the Funderbeam marketplace.
“We do consider secondary sales on Funderbeam to get exits for us,” says Startup Wise Guys co-founder Herty Tammo. “However, we've got a survival rate of more than 77% and don't feel any urgency or particular difficulty when it comes to exits. This is another tool in our repertoire, and a very useful one at that.”
One of the biggest questions that comes to mind when looking at the model is this; is there enough demand for secondary investments specifically focused on early-stage tech startups? It is, after all, an investment in a company that has yet to reach a liquidity event. But with big risk comes big reward, right?
Ruusalepp explains, “Imagine one could get access to some future unicorns in early stage by diversified investments? That is what we aim to do and hope other accelerators, angel clubs, VC’s follow their lead.”
Sounds like a fair proposition to this author.