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Last week Nasdaq, the New York based electronic stock exchange announced it was starting a new private market exchange for unlisted companies.
Now it seems Israeli start-up Mobli may be one of the first companies joining the new marketplace. As an Instagram competitor Mobli has raised US$60 million recently, including from Mexican telecoms billionaire Carlos Slim. In an earlier round Mobli also succeeded in picking up US$28 million from Kazakh entrepreneur Kenges Rakishev and others.
The goal of the new Nasdaq Private Marketplace is to provide qualifying private companies the tools and resources to efficiently raise capital, control secondary transactions, and manage their equity-related functions.
To qualify for the new Nasdaq private market a company must be to a degree already successful, and have either raised over US$30 million in private capital already, or have an appraised enterprise value of US$50 million. Revenues and profits are also obligatory, with net income of at least US$0.75 million annually.
Gregg Brogger the new President of the Nasdaq Private Market said, “We are excited to officially open NASDAQ Private Market for business, ” adding, “We listened to the needs of private growth companies… NASDAQ Private Market will bring liquidity, efficiency and control to private companies.”
Bob Greifeld, Chief Executive Officer of the parent Nasdaq Omx group said, “A critical component of the NASDAQ OMX mission is providing support to the innovators and entrepreneurs in today’s marketplace, ” adding “For over 40 years, NASDAQ OMX has been committed to serving the needs of companies for their entire life cycle.”
The idea of such a private market approach is to enable unlisted companies to identify a pool of potential buyers and internally set parameters on the percentage of holdings that shareholders can sell. Participating shareholders gain liquidity when transactions occur, and the company is able to facilitate the transition of ownership later into the hands of long-term institutional holders.
Nasdaq will require that all investors in the new private market place will be accredited by fully qualified Nasdaq Private Market member broker-dealers. In addition, to ensure investors have appropriate financial information, a company that joins in will have to make certain limited disclosures to those that transact in its shares.
Nasdaq’s goal for the new market will then be to gradually establish dialogue over time between such companies and institutional investors as well, to prepare the way for future entry into fully public markets.
Clearly for Mobli, and others who follow down this road, joining this marketplace serves similar goals. First, to become known over time by serious institutional investors and therefore become successful IPO material sooner perhaps. And second, as well, to find a way to give some of a company’s existing locked in investors a way to find some liquidity if indeed the story becomes well liked.
Everybody wants to be able to head for the exits these days, it seems – sometimes even before the movie is over.-
