TC50: Sprowtt automates early IPOs for startups

September 15, 2009 | Anthony Ha | Comments |
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sprowtt-marketplaceEntrepreneurs and venture capitalists complain frequently that few companies can have initial public offerings (IPOs) anymore, because the legal difficulties and compliance costs are so high. A startup called Sprowtt says many more companies will now be able to sell shares to the public, and to do so much earlier in their life, because its websites automates the process. The company launched today at the TechCrunch50 conference in San Francisco.

On the Sprowtt site, companies enter requested information and upload their businesses plans. This is the hard part to believe: Sprowtt says they’ll handle all the legal details. Sprowtt says it developed its product with two law firms, though it’s not saying which ones.

Sprowtt users can then log onto the site and buy shares in the company of their choice, which they can then sell. In a way, the company is pitching itself as an alternate NASDAQ. Shares can be bought and sold, though Sprowtt hasn’t created an exchange for those transactions to happen yet.

To be clear, these aren’t traditional IPOs. Since companies are selling shares earlier on, they’ll probably make less money. This is more like an alternative or complement to traditional venture funding. There are other companies trying to offer startups additional ways to achieve liquidity (i.e., sell their shares), such as SecondMarket. So far, though, startup founders still dream of ringing the bell on Wall Street.

Click here for more startup news coming out of the TechCrunch50 conference.

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About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • Cody Simmons
    Sprowtt could be a great way for young people that are sophisticated investors or techies to invest in startups in which they know the space well
  • Hi Anthony, feel free to track me down at our table if you're still around here at #tc50. We don't "handle all the legal details," what we do is systematize as much compliance as possible. Think of TurboTax -- in this case we offer guided software to help a company and its legal counsel put together the documentation for doing an offering, and help manage the details at the state and federal level.
  • David-
    I'm trying to sign up for the beta but when I get to the investor qualifications page the "submit" button doesn't seem to work.
  • Luke
    Please send an email to luke AT sprowtt.com with your browser version and the specifics of your problem. Thanks!
  • bobqu
    This is one of the dumber ideas out there. There are no names of who is running this outfit and how qualified they are. Anyone who sends them a business plan is crazy.
  • barbqu (barbara)
    bobqu, this is one of the dumber comments out there...and I've had the chance to read other comments you've made. bravo. Aside from your ad hominem attack (which is addressed towards unnamed people, oddly enough) not ontologically following the "dumber ideas," you also apparently failed to realize that they don't accept business plans, and make technology for investment banks. douche.
  • bobqu
    What do they make that inveatment banks don't have and it was unamed because the website does not list any management. I am assuming they have some they just have chosen to keep it quiet.
  • For investors that are deep in the know, they could really capitalize on a system like Sprowtt.

    Doc Johnson | Adult Toys
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