Liquidnet – Profile
HQ: New York City
Founded: November 1999 and launched in April 2001.
Management: CEO Seth Merrin previously founded VIE Systems, New Era of Networks and Merrin Financial. Big hitters on the board are topped by hedge fund all-star Michael Price.
Investors: Company has raised $29M to date, primarily from TH Lee Putnam Venture Partners.
Business Model: When a large financial fund wants to unload a big block of shares, it currently works with a brokerage that charges a fat commission to cut up the block into smaller, more discrete units. Liquidnet does an end-run by enabling buy-siders to sell big blocks to other buy-siders completely anonymously. In other words, its a peer-to-peer electronic equity trading that bypasses exchanges. Commissions are 2 cents per share vs. 5+ cents at traditional brokerages. Liquidnet currently has nearly 300 member firms. Company expects revenues upwards of $100M in 2004 up from $50M the prior year.
Competitors: NYSE, POSIT, Instanet, Harborside+., Pipeline Trading Systems.
Dirt: Slam dunk. No more subways for these guys. Taking on the Big Board with technology innovation is like taking candy from a baby.