CircleUp Launches a Secondary Market

By Henry Thomas on Tuesday 8 September 2015

Alternative Lending

Back in June last year Ryan Caldbeck – company CEO – wrote a blog about “The Importance of Secondaries in Angel Investing”. It seems the company has decided to answer that debate with its own solution.

The delay in receiving any cash flow from crowdfunding is a major investment stopper and the new market will provide much needed liquidity to the equity crowdfunding sector. In light of the poor liquidity in the system, the market will open twice a year, to allow proper valuation in between and to enhance the chances that buyers and sellers will be active at the same time.

The CEO remarked:

Helping to shorten the liquidity period or giving certainty over the exits is something that both sides are particularly excited about

He continued by saying that demand for the platform was driven by companies that had completed a primary raise through CircleUp. 15 to 20 companies will be used to launch the secondary market.

Undoubtedly, Mr Caldbeck’s concerns over liquidity correctly follow one of the main pitfalls of equity crowdfunding. Providing a central platform allows the concentration of capital, which should improve liquidity. Measures such as this one help to establish the market and should, over time, usher further inflows of money into the system – cementing equity crowdfunding’s status as an emerging asset class.

Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.

AltFi's new weekly US newsletter breaking down the ins and outs of America's burgeoning fintech sector. Delivered Monday 9am EST/ 6am PST.