Personal Trading of Shares by VCs on Secondary Exchanges Raises Concerns of Conflicts of Interest
The trading of private company shares in the personal accounts of venture capitalists is raising concerns over potential conflicts of interest for firms as the influence of secondary market exchanges continues to grow. Numerous venture firms permit employees' trading in secondary market shares with some limitations, including Lightspeed Venture Partners, Bessemer Venture Partners, YCombinator, Matrix Partners, Founder Collective, Blackberry Partners Fund, Volition Capital and Rho Ventures, according to a peHUB investigation into the practice. Others -- which appear far fewer in number -- such as Flybridge Capital Partners, block the practice with policies demanding general partners hold no secondary securities. Many more VC firms refused to comment at all, when peHUB contacted senior partners. (How do you feel about this issue? Take our poll at the end of this story.) Sources at firms willing to acknowledge they prohibit GPs from making secondary market investments cited conflict of interest concerns when asked by peHUB.com.
