Second Market Action

Second Market just released its third quarter numbers and the platform for trading private company shares is on a tear. It completed nearly $75 million in transactions, bringing its total deals this year to $250 million. That translates to major growth: it's 2.5 times the deal value in all of 2009 and five times the number of transactions. Yesterday I outlined how you can trade on this platform. But even if you don't want to buy, or don't qualify, Second Market's trading data indicates where savvy accredited investors see opportunity in this fast-growing alternative market.


Facebook is consistently the most popular investment — it accounted for 37 percent of trades last quarter. That's even more impressive considering that shares are priced base on a whopping $33 billion investment.

There's no question, investors are obsessed with social media — it dominates investor demand. Facebook is consistently the company investors are most eager to invest in, with 34 percent of buy-side interest. It's followed by Twitter (5.8 percent), LinkedIn (5.7 percent) and Zynga (3.9 percent).

This rush to invest in social media makes sense: LinkedIn is valued at around $2 billion. Twitter's value is also around $2 billion, even though it's just starting to generate revenue. And Zynga has a whopping $5 billion valuation on nearly a billion dollars in revenue. There just aren't any public companies that offer a pure-play opportunity to invest in social media. As Rob Armstrong, senior Columnist for Dow Jones Investment Banker pointed out to me: it's hard to come by tech companies with really strong top line growth in the public markets.

So what's the next Facebook? SecondMarket's report of surging investor demand shines a spotlight on a few companies. Groupon saw the biggest leap in demand this past quarter — a 63 percent jump — as the group buying company grows users and draws media attention. The company will generate an estimated $500 million in revenue this year — check out my interview with CEO Andrew Mason:

Investor interest in Zipcar jumped 47 percent: the company filed its S-1 in the past quarter and is expected to go public this fall. Other companies drawing growing interest: real estate website Trulia (up 30 percent in the quarter), revolutionary music service Pandora (up 29 percent), and green tech company Bloom Energy (up 29 percent).

And this quarter investors had three new companies on their radar -- for the first time investors asked SecondMarket for a chance to buy shares of Angie's list, which sells a subscription to consumer reviews, online video platform Brightcove, and web content company Mahalo.

There were some very unexpected names on SecondMarket's most-traded list-- they have nothing to to with social media. Check out my next blog for the details.

Questions? Comments?