Equidate's new stock market for private tech offers in-depth data on startups (opens in new tab)

Hi there, co-founder of Equidate here, happy to answer any questions you have.

We're well aware of Sandhill Exchange — they were akin to a prediction market — we're a market where employees and investors who own shares are able to get liquidity, and accredited investors are able to invest.

We've worked with our primary outside counsel, Lowenstein Sandler (an internationally-prominent securities law firm), to ensure our compliance with all regulation. As the article mentions, we've discussed Equidate with regulators since 2014, and this past January FINRA approved our purchase of a broker-dealer.

Finally, we've gone above and beyond to make sure our customers are protected. We have an exclusive underwriting agreement and insurance policy with Munich Re, the world's largest reinsurance company, to protect our investors from fraud.

It's very rare for a startup our size to have a full-time Chief Legal Officer & Chief Compliance Officer, and it's a testament to our efforts to get this right.

>"Sand Hill began as two Silicon Valley entrepreneurs creating an online business involving the valuation of private startup companies in the region along the lines of a fantasy sports league. But Gerrit Hall and Elaine Ou changed their business model multiple times, and earlier this year Sand Hill evolved to invite web users to use real money to buy and sell contracts referencing pre-IPO companies and their value.

Sand Hill sought people to fund accounts using dollars or bitcoins. Hall and Ou did not ask users about their financial holdings or limit the offering to users with any specific amount of assets. In fact, they wrote on the Sand Hill website: “We accept everybody regardless of accreditation status.” Hall and Ou intended to pay users who profited from their contracts. "

Interesting. Hadn't heard of this. Here's the SEC link: https://www.sec.gov/news/pressrelease/2015-123.html

We're running a promotional event called the Early Is Everything Pre-IPO Pricing Event this Thursday (7/28) and next (8/4) to celebrate the launch of our new trading platform.

We'll be giving over 100 people the opportunity to get in early on Facebook ($4.54) and Tesla ($2.97).

As per the Event FAQ on the linked site, we're taking a loss on every certificate to prove a point — that when it comes to investing in the most successful companies in the world, early is everything.

The "Early is Everything" promotion offers eligible participants the opportunity to purchase a certificate at the pre-IPO price of either Facebook or Tesla Motors, redeemable for securities through a registered broker-dealer, or for merchandise, at the current price of these companies as of July 13, 2016. Offer good while supplies last. Other terms and restrictions apply, please see event page for full details. See: https://early.equidateinc.com/

It appears to be email grab... but this is straight gimicry and is it even legal????

Would the employee care? The right of first refusal means your employer has to match the $.

Buyers may be scarce if too many employees are so encumbered though. Is that your concern?

That's for transferring, the sale only. And the lack of transparency means we also don't know if "most" is really like that, no matter how standard your CEO said it was.

The three startups you worked for probably share some venture capital firm or related board member that copy and pasted the equity contract

But it didn't mean, necessarily, that condition is so prevalent or that much of a roadblock

As the company's in-house lawyer, I see that people who have a lot of stock have generally hired a wealth manager, financial advisor, or personal lawyer who advises them on transactions, or learn through colleagues who have done so. Some lawyers specialize in employee equity, or private transactions more generally. Shares of stock can be bought and sold like other financial assets, subject to any regulations and contract obligations that apply. That's a definitional attribute of stock and other securities. Public markets are a layer on top of that, not something fundamentally different. Employee shareholders who are not directors, officers, or 10% owners generally fall under a 4(a)(1) exemption from registration. There are a bunch of online resources on the topic, for example http://securities-law-blog.com/2015/06/23/section-4a1-4a1%C2... (no connection and not an endorsement, the site just looks helpful).

CLO-dude here. Hmm. We are still fine-tuning the option plan so for now as a technical matter, no.

When we do flip that switch, I expect that we will offer our optionees, like other team members, early investors, advisors, and other shareholders at least as much liquidity as we expect out of the rest of the industry. All of our stock agreements to date contemplate secondary liquidity. We might have to do that via third parties — I haven't thought through the implications of trading Equidate shares on Equidate. It sounds like a Malkovich moment.