Trades on SecondMarket Double in Fourth Quarter

Fourth-quarter earnings for SecondMarket, the place investors go to trade in hot nonpublic tech companies like Facebook, show the company has come a long way from the days in 2005 when a small team of employees was ringing a bell every time it landed a customer.

Trading activity more than doubled from the third quarter, reaching $157.8 million. Red-hot Facebook shares, which are hard to come by outside SecondMarket or a private offering to high net worth clients of Goldman Sachs, accounted for 39 percent of completed fourth-quarter transactions. LinkedIn and Etsy were the next highest-volume stocks, accounting for 7 percent and 5 percent of all trades.

Although SecondMarket has been getting a lot of attention for its dealings in software companies, securities related to consumer products and services accounted for a 56 percent majority of transactions. (It’s worth noting, however, that by SecondMarket’s reckoning, Foursquare is falls into the consumer products and services category — not the software category.) Software came in second, at 39 percent.

By the company’s accounting, the variety of buyers who come to SecondMarket is expanding to include hedge funds, mutual funds and asset managers on top of the venture funds that have typically constituted the company’s customer base.

mtaylor [at] observer.com | @mbrookstaylor

Trades on SecondMarket Double in Fourth Quarter