Closed IPO window, “discount mentality” driving secondary trading.
Vancouver-based FinTech startup Hiive has rolled out its venture capital (VC) secondary marketplace to Canadians after announcing it has received registration across Canada as an exempt market dealer.
Through its platform, Hiive matches buyers and sellers of stock in private, VC-backed firms, permitting them to discover pricing and trade shares without engaging a live broker. The startup serves a space that also features players like EquityZen, Zanbato, and Birel.
Hiive, which has already been operating in the United States (US) for nearly a year, claims it already services thousands of customers south of the border, where it is regulated by the US Financial Industry Regulatory Authority and Securities and Exchange Commission.
“With the IPO window firmly shut, this may be one of their only paths to cashing out in the foreseeable future.”
The startup’s expansion into Canada will permit Canadian tech employees and accredited investors—including venture capitalists, investment funds, family offices, and ultra-high-net-worth individuals—to buy and sell shares in privately-held tech companies at a time when many firms are opting to stay private for longer.
Per PitchBook, following a “near-standstill” in the secondary market, after public tech stocks tanked and buyers and sellers had “divergent expectations” concerning late-stage private company valuations, there has been a recent uptick in demand for secondhand stakes in startups.
This has come as founders, employees, and VC backers of late-stage tech companies that had planned to go public soon but opted to hold out amid a largely frozen and unfavourable initial public offering (IPO) market have sought liquidity and become more willing to accept discounts on their shares in order to acquire it.
“Thousands of Canadians are employed by the 1000+ US, European, and Canadian tech companies that are listed on our platform,” Hiive co-founder and CEO Sim Desai said in a statement. “With the IPO window firmly shut, this may be one of their only paths to cashing out in the foreseeable future.”
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Hiive aims to bring transparency to the traditionally opaque private equity (PE) secondary market. Founded in 2021, the company was spun out of Toronto-based Setter Capital, an investment bank that focuses primarily on the PE secondary market.
Led by Desai, formerly managing director at Setter, Hiive’s other co-founders include fellow Setter alumnus Prab Rattan (Hiive’s head of capital markets), Sarah Huggins (Hiive’s COO and general counsel, and also married to Desai), and Stuart Eccles as CTO and head of product. Per Secondaries Investor, Setter is a minority investor in Hiive; following the publication of this story, a Hiive spokesperson told BetaKit that “Setter Capital is not currently a shareholder on [Hiive’s] cap table.”
Per the company’s website, Hiive seeks to “preserve as many of the established best practices of brokers in the global pre-IPO secondary market, while eliminating the opacity and uncertainties traditionally associated with private market trading.”
Feature image courtesy Hiive.
