The New Wave of Private Stock Trading Platforms

The Daily Stack
May 13, 2020

Online stock trading platforms have seen a surge in demand in recent months as investors seek to buy equities perceived to be undervalued.

Investing app Robinhood saw record deposits in the first quarter of 2020, with daily trades up 300% compared to late 2019. Elsewhere, eToro and Raging Bull Trading saw demand surge 220% and 158%, respectively, over the same period.

The desire to invest didn’t stop at public companies. Many startups are now launching trading platforms for private companies. Yesterday, Carta, an eight-year-old maker of cap table management software, announced that this summer, it would debut CartaX, a private company shares trading platform. On the heel of that announcement, two other companies that were long competing against one another are now coming together to boost the odds that they can survive and maybe thrive against the others. Pending regulatory approval, Forge, founded as Equidate in 2014, and Sharespost, founded in 2009, will join forces under the Forge brand, after agreeing to a $160 million cash-and-stock deal.

The race is officially on. Carta and Forge are far from the only companies trying to carve out a piece of the market. GTS, a high-speed trading firm backed by ClearList Ventures, is launching a platform that trades pre-IPO shares. Bourse, backed by Refinitiv, launched in May a platform with, to start, 39 private companies and investors from 130 countries.

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Come June, another rent payment is due, and people continue to worry that missed rent payments will be the next indicator of a grim economy. On the contrary, the rental market is growing, and landlords are expanding. The largest residential landlord, Invitation Homes, reported its highest occupancy rate to date and better than normal rent collection. In the public markets, the largest two residential landlords, Invitation Homes, and American Homes 4 Rent have outpaced the S&P, with gains of +57% and +36%, respectively since late March. Both now are eyeing expansions and new construction.

If the last recession is any indication of how the market behaves, this latest uptick is good news for landlords. Immediately following the '08 financial crisis, the market saw the rental market steadily grow while homeownership stagnated. It was only until the end of 2016 that homeownership started to pick up, 7 years after the onset of the recession.

This trend bodes well for property tech firms (PropTech) and construction-focused startups. Challengers to the industry have focused on solving the dual problems of cost overruns and a lack of ability to scale. Briq, a PropTech startup that aims to bring the fintech precision in budgeting to the property construction world, just raised $10M this week.

Nailing down construction costs is key and will help landlords create housing stock in an uncertain time. Moreover, 2019 was a great year for property tech fundraising and deals. View all construction tech companies - PrivCo.

Funding & Deal Highlights:

Coty sells majority stake in professional beauty division. The $4.3B deal will make KKR the new owner of the beauty line. During the last recession of '08, nail polish and lipstick sales saw growth as consumers still looked to treat themselves but were unable to afford large-ticket items. KKR is betting on a similar recession-recovery story this time.

Carbon Health lands $26M, triples headcount. The company focuses on testing and care during the COVID-19 pandemic. Carbon Health has set up a mobile testing clinic to serve the Bay Area, with a rapid COVID-19 test.

TeleMedicine startup SmileSnap closes seed funding round, eyes immediate Series A to expand services. Telehealth has expanded to specialties previously thought improbable. The platform is already trusted by 1,500 dentists and orthodontists, who use SmileSnap as a virtual consultation and appointments SaaS platform.

Hummingbird Bioscience extends Series B round to $25M.

Mellow turns to equity crowdfunding to raise $1M in seed funding.

Quirch Foods acquires Tennessee-based food distributor, Butts Foods.

ECI Software Solutions acquires BuildTools.

Novantas acquires Amplero to accelerate AI-powered transformation.

Sleeper raises $20 million to expand into fantasy esports.

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