Akkadian Ventures has raised a $22 million fund for purchasing stock in private companies from entrepreneurs, early employees, and angel investors.
Secondary sales have had a higher profile recently as a way for investors to get into hot tech companies like Facebook, Zynga, and Twitter before they went public, often through secondary market sites like SecondMarket. Co-founder and chief investment officer Ben Black (who previously co-founded New Cycle Capital and was on the founding team at Harris Interactive) says Akkadian “almost always” works directly with companies to set up a custom stock purchase program, giving team members a way to cash out on some of their equity without affecting any future IPO plans.
“For example, we understand the need to protect the company’s 409A valuation, and we are flexible enough to include insiders as partners if they wish to invest more in the business,” Black says. “Our goal is to become the company’s early liquidity partner on an ongoing basis.”
One of the features that Akkadian touts is its speed — the firm has an automated, data-driven approval process through something it calls The Momentum Index. If a company gets pre-approved through the index, Akkadian says it can provide a written offer for stock purchases within a few hours.
This is the firm’s second fund. The first one was, in Black’s words, “a $5 million pledge fund to test whether our strategy would work.” The sales are confidential, so Akkadian won’t identify any of the companies in its portfolio, but it says that there have been nine deals to date, and that two of its investments have already gone public, with another four announcing plans to file.
As for how the Facebook IPO (which was largely — though some have argued unfairly — seen as a disappointment) will affect Akkadian’s plans, Black says, “We expect that the bar on going public will stay very high as a result, which will increase the demand to find diversification solutions in the private market.”