Secondary Markets Explained: How EquityZen Provides Liquidity for Pre-IPO Shares
with Aatish — CEO & Founder
Atish Davda, CEO and founder of EquityZen, joins The Startup Project to demystify the world of secondary markets. Discover how his personal need for liquidity led to the creation of a platform that provides access to pre-IPO shares for accredited investors.
5 Things You'll Learn from This Episode
- Understand the three evolutionary stages of private markets, from early IPOs to today's standardized secondary platforms.
- Differentiate between early-stage primary investments (power law returns) and late-stage secondary investments (doubles and triples).
- Evaluate secondary deals by analyzing stock type (preferred vs. common), price discounts, and the credibility of existing institutional investors.
- Learn how to spot potentially illegitimate secondary transactions, such as forward contracts or IOUs, that lack company approval.
- Distinguish between a company's 'Right of First Refusal' (a matching right) and a 'blocking right' in secondary share transfers.
About the Episode
Atish Davda shares the origin story of EquityZen, born from his own struggle to liquidate a small amount of private stock. The conversation explores how EquityZen standardized the secondary transaction process, making pre-IPO investing accessible beyond multi-million dollar blocks. Atish breaks down investment strategies, the importance of company-friendly practices like respecting the Right of First Refusal, and the risks of unapproved secondary deals.
Timestamps
- 0:00 — Introduction
- 1:10 — The Personal Story Behind EquityZen
- 4:19 — The Three Stages of Secondary Market Evolution
- 9:00 — How EquityZen Standardized Secondary Transactions
- 14:44 — Portfolio vs. Single Company Investment Strategy
- 20:10 — Understanding EquityZen's Business Model: Fees vs. Carry
- 24:34 — Why Company Relationships and Approvals Matter
- 27:17 — The Nuances of Right of First Refusal
- 30:36 — Identifying Legitimacy and Risk in Secondary Deals
- 37:14 — Marketing in a Highly Regulated Industry
- 40:19 — Comparing IPOs and Direct Listings for Investors
- 44:04 — Future Outlook for IPOs and Secondaries
About Aatish
Atish Davda is the CEO and founder of EquityZen, a leading marketplace for pre-IPO employee shares. He founded the company after personally experiencing the challenge of gaining liquidity from private company stock. Previously, Atish was the co-founder and CTO of Nullsoft and VP of product at Ampush.
CEO and Founder at EquityZen
About the Host
Nataraj Sindam is the creator of The Startup Project, a podcast featuring founders, investors, and operators building the future.
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