The mystery of the private company — more specifically, valuations tied to private companies — is perhaps set to become a bit less shrouded in secrecy.
The New York Times reported on Monday (July 25) that Equidate, which is billed as an online marketplace geared for trading shares of private companies, is on track to release free information on private companies, looking across and parsing data from filings that would also disclose the prices that are paid, and have been paid, for private companies. Equidate will also offer up online tools that would let holders examine their own holdings and ascribe value to those holdings.
NYT noted that, in an interview with Sohail Prasad, a cofounder of the firm, the mindset has been one where “we’re giving away this data to help create a more robust market and to give stakeholders, like employees, investors and other shareholders, a better way to understand the value of their stock.” The firm traces its roots to 2013, and through its exchange, deals have some rules governing disclosure and shareholder protection, said NYT.
As has been wisely noted on Wall Street, in Silicon Valley and beyond, shares are hard to come by in private investments, and robust data for valuation purposes is anything but robust. The site itself currently has active listings for roughly $750 million in private shares. The wrinkle here is that the marketplace lets investors comp the current price at which shares change hands against the backdrop of what others may have paid for it through institutional or early backing financing. Secondary markets are also getting regulatory scrutiny, with lack of efficient trading and even instances of fraud.
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