As many private companies try to avoid raising capital in the current market, it’s become significantly harder to figure out what companies are actually worth. But a market that’s traditionally even less transparent than venture is providing clues.

The secondary market, where investors can buy and sell existing stakes in a startup or fund, offers a more fluid way to tell how buyers and sellers are valuing companies between formal funding rounds. These deals were traditionally harder to track than primary venture capital deals, as they don’t generally get announced, but a new fleet of startups is shining light on them.

Over the past few years, multiple startups including Caplight and Notice have launched products that track both completed secondary deals as well as bids from buyers and sellers, offering users a real-time view of how investors are valuing companies. Others including Birel and Hiive Markets look to make it easier to trade secondary stakes.

Caplight’s co-founder and CEO, Javier Avalos, told TechCrunch+ earlier this year that he was inspired to build his company because he felt the lack of transparency in the market prevented institutional investors from being able to properly hedge bets in the space or accurately protect against downside risk.

Tyson Hendricksen said he launched Notice in 2021 because he felt the industry he had worked as a broker in for years wasn’t accessible enough to all of the underlying stakeholders it affected — specifically, company employees with stock options.

“I was so appalled at how fragmented and busted the data was, even as a broker who was active every day,” he told TechCrunch+. “It was really hard to figure out what was going on. That was my job. For anyone else who had a half-an-hour lunch break and wanted to figure out if they wanted to sell their shares or not, it was really hard.”

Secondary market trackers are lighting up a traditionally dark deal environment by Rebecca Szkutak originally published on TechCrunch

https://techcrunch.com/2023/04/12/secondary-market-startups-vc-valuations/