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SecondMarket Booms & Facebook's Hotter than Ever

There's no question — investors want a piece of private companies and the secondary market is booming. SecondMarket, the largest platform for trading private company shares, just released its fourth quarter 2010 numbers, and the growth is striking.

Trading volume more than doubled in the fourth quarter from Q3, to $158 million transactions up from just $73 million the prior quarter. And there are accredited investors and venture funds participating in the second market than ever — it has 35,000 participants up from just 6,500 last year and 2,500 a year ago. (For a primer on how to invest in SecondMarket click here)

Facebook — the most popular company on SecondMarket by far — and other fast-growing, profitable companies are staying private longer than ever, which means this is the only way to snag a piece of the action. A full 39 percent of SecondMarket transactions last quarter were of Facebook — some of them at a $50 billion valuation for the social network. Facebook is seven years old — a decade ago a company of its size and scope would certainly be public.

Social media-related companies were the most popular on SecondMarket by far — accounting for over half of all transactions. The second most traded company on the platform is LinkedIn, with seven percent of trades. The business-networking platform is expected to file its S-1 shortly and file to go public this year.

SecondMarket's quarterly numbers reveal which companies investors are betting will be the next big thing. A handful saw a remarkable surge in interest between Q3 and Q4. Groupon, which turned down a $6 Billion offer from Google last quarter saw interest in its shares grow 84 percent. And interest in Dropbox, the file sharing company, grew a full 100 percent.

And for the first time SecondMarket investors expressed interest in Foursquare, Clickable, an online ad company, Meetup.com, and Funnyordie.com. It's hard to translate interest in these newbies as anything concrete, but it's safe to say that some savvy investors have their eye on them as money-makers down the line.

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.