Abstract and Keywords
The possibility of issuance and resale of private securities was originally introduced in the United States by the Securities Act of 1933 but the nature of such securities made their trades costly and extremely rare. Over last few years, a series of regulatory changes has progressively made the trade of private securities issued by young companies easier and more efficient. This chapter notes that in this framework, and especially in response to the sharp decline in initial public offerings (IPOs) during the financial crisis, two ventures (namely SecondMarket and SharesPost) were pioneers in launching online exchanges for secondary, private securities. While not all start-ups are able to use such platforms to enhance their liquidity, the more mature ones—those that would have probably gone public otherwise—have generated enough trades to partly solve their financing needs. The emergence of private capital marketplaces raises several theoretical and empirical issues.
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