Barry Silbert is an Emory graduate and CEO and founder of SecondMarket (www.secondmarket.com). In a recent speech to the Stanford Business School, Barry presented a fascinating summary of the problems with the current IPO market and obstacles facing entrepreneurs and venture capitalists. The most notable obstacle is illiquidity — the inability to freely sell private company stock.

Click on the video below to view Barry’s remarks as an entrepreneurial thought leader. My summary of his comments follows.

1. The public company markets are broken and generally available only to larger companies, thus foreclosing many entrepreneurs from gaining liquidity through the IPO process.

2. Sarbanes Oxley and other regulatory impediments generally foreclose the IPO market to entrepreneurs, so an alternative source of liquidity is needed.

3. The average timeframe for an entrepreneurial company to IPO has extended from five years (in the 90s) to ten years today. Who wants to wait around ten years before obtaining liquidity?

4. Venture capitalists need a route for liquidity within five to seven years which is the general life of their venture funds — they generally can’t wait ten years or longer.

SecondMarket is an entrepreneurial success story that provides the owner of restricted stock of some companies the ability to sell shares through a controlled market process. The secondary market is still evolving and Barry does a great job of explaining the evolving nature of his business.

There are still significant hurdles to be overcome, including regulatory compliance, disclosure, and the ever present fear of fraud. Despite these challenges, SecondMarket appears to be filling a need for owners of illiquid private company stock. Just look at the interest in buying and selling of Facebook shares and the profits that will be forthcoming when the company goes public.

Enjoy Barry’s remarks about his company and the new challenges facing entrepreneurs and investors.

This information is presented for educational purposes and is not intended to constitute legal advice; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Contact John Yates for more information at jyates@mmmlaw.com