The post was originally published in Russian on Startup of the Day. Alexander kindly agreed to republish what we think is of great value to our readers.
Every shoe shiner knows that an IPO is a sure way to make money. Brokers upsell this tool to their clients non stop, there’s nothing for new startups to do here, the market is occupied. Instead, quite close – at a single letter’s distance – there is another, absolutely vacant niche – SPO, where a public company sells its new shares. It uses this means for financing operational losses or some big acquisition in the future. The investor can use this means for buying shares at a price lower than at a stock exchange.
Such deals happen much more quietly than initial offerings, and the participants are almost exclusively major funds. Or – clients of PrimaryBid, the English startup of the day. The startup’s mobile app gathered a large audience of small individual investors and offers them to take part in potential SPOs of companies. The latter send requests, the platform consolidates them, receives a significant amount, and enters the deal as a ‘cool kid.’ The company transfers the shares to a joint account, the startup distributes them among its clients. There is no commission other than the price of allocation, the company pays everything, it wants additional marketing.
A year ago PrimaryBid brought in USD 50M of investment. Interestingly, it came from regular institutional players and not some crowdfunding platform.
#uk #roundb #investment #fintech
Translation: Kostiantyn Tupikov
Alexander made his career in Russian internet companies including Mail.Ru, Rambler, RBC. From 2016 to 2018 he was Chief Strategy and Analytics officer in Mail.Ru Group. In this position, he worked on M&A, investments, and new project launches. In 2018 he became Deputy CEO in Citymobil, a Russian Uber-like company that was invested by Mail.Ru Group and Sberbank (the biggest Russian bank), then he left the company to launch his own projects. Now Alexander is a co-founder of United Investors – the platform for co-investments in Russian early-stage startups. His blog #startupoftheday (#стартапдня) is one of the most popular blogs about startups in Russia.