Want to own a piece of Tesla Motors? Facebook? LinkedIn? Unless you're a founder, employee, or a funding source for these companies, you're out of luck. That's what separates "public" companies from private: anyone can buy a piece of a public company on an open exchange. There are no wide-open exchanges for private company shares.
But there is now, at least to a degree. Sharespost is a marketplace where people who own pre-public shares can connect with investors who want that stock. Since these private companies also don't have open, audited books where potential investors can study up on the companies, Sharespost collects analysts' research on the companies in its market to help buyers and sellers agree on a value for shares being transacted.
The added values of the Sharespost marketplace, according to CEO Greg Brogger, are several. First, it connects buyers and sellers. Second, it helps with "price discovery," as noted above. Third, it facilitates the transactions by handling the paperwork and helping buyers and sellers work through contingencies attached to employee stock awards. And fourth, through an arrangement with US Bank, it processes and clears all the money.
Sharespost is not for the casual investor who wants to nab a few shares of Facebook for fun. Each transaction incurs a $2,500 fee (for both buyer and seller) from US Bank. And you must be an "accredited and sophisticated buyer" under SEC Regulation D, which limits the universe of buyers to people with substantial invested assets and experience. There is no such limitation for sellers. So if you're sitting on a few thousand shares of beached stock at a biggish private company, and baby needs a few thousand new pairs of shoes, Sharespost might be able to help you out.
Bizzarely, Sharespost does not collect a piece of these transactions. Brogger doesn't want to make his company a brokerage. He doesn't want it to be seen as profiting from individual transactions on his site. Instead, he charges buyers and sellers a $34 a month fee for using Sharespost. "There are a lots of transactions happening now in coffee shops," Brogger says, and with his model, he doesn't care if that continues or if the sales are closed through the US Bank clearing system. Although with the amount of money per transaction involved here, I don't see why he doesn't go for a small bit of the action.