Is there a bitcoin ETF?

The famed Winklevoss twins are hard at work trying to debut the world’s first bitcoin exchange-traded fund or ETF. In the meantime, there’s a pretty close alternative in “BIT.”

The famed Winklevoss twins are hard at work trying to debut the world’s first bitcoin exchange-traded fund or ETF. They filed an amended S-1 in October (see the Winklevoss Bitcoin Trust at SEC.gov). They’d like to sell 1 million shares in the trust at $20.09 per share (an amount that’s definitely going to change if they can ever launch their ETF).

In the meantime, there’s a pretty close alternative: the BitCoin Investment Trust, which is offered by SecondMarket. They call it “BIT,” and according to their documentation, the trust was “modeled on the popular SPDR Gold ETF, but functionally similar to a private fund.” It works by giving buyers a vehicle to buy, hold and store large quantities of bitcoin. A few notes on the BIT:

  • You have to be an accredited investor to get involved (i.e. have a net worth of $1 million or more – or an annual income of $200,000+ over the past two years).
  • The minimum investment is $25,000.
  • The fund has a “front-end” fee of 1.5 percent and a “back-end” fee of 1.5 percent as well as an annual “administrative and safekeeping fee” of 2 percent.
  • The fund holds 34,700 BTC ($14.4 million)

Investor reception for the bitcoin trust has been huge. Managers hoped to raise $10 million by the end of the year, and they’ve already raised $18 million since September. I’m convinced news around the trust is helping to drive up the price of Bitcoin even faster than it would have otherwise risen. And, if the Winklevoss brothers are ever able to bring a publicly-traded ETF to market, expect bitcoin to surge even further and a whole lot faster.

I actually hope that the Winklevoss ETF doesn’t come to market soon so that bitcoin can further establish itself as an actual medium of exchange. If the price goes up too far, too fast, all the actual bitcoin in the world could get locked up in investments. Then, the virtual currency loses some of its effectiveness. Liquidity is a requirement for any widespread medium of exchange, and that’s exactly what I hope bitcoin becomes.

A ZocDoc IPO? Could it be the next big thing in tech?

If backing from Digital Sky Technologies and Goldman Sachs isn’t enough, here are three reasons why a ZocDoc IPO would probably be a good buying opportunity.

Every now and then, a Web site comes along that makes you wonder why it didn’t exist years ago. That’s how I felt when I learned about ZocDoc.com – an online booking system that lets you search for a doctor nearby who can see you right away.

Calling your doctor and scheduling an appointment three days in the future could be a thing of the past. Of course, it also means you might need to see a doctor who doesn’t know your name. Does that matter, though, when you’re sick and eager to get better?

Here are three reasons why a ZocDoc IPO (if there’s even one on the horizon) might be a good buying opportunity:

1) Investors are already knocking on ZocDoc’s doors. ZocDoc’s one of several companies that were identified as “rising stars” on SecondMarket – a site where users can buy shares in private companies (see our post How to buy stock on SecondMarket for more). While ZocDoc doesn’t have any shares available on SecondMarket yet, it’s one of the top three social sites SecondMarket users want the opportunity to invest in (behind only Pinterest and Practice Fusion).

2) Rapid growth. ZocDoc’s already got 1.2 million users a month in 17 markets (per CNBC), and the company plans to roll out nationwide next year. ZocDoc’s pushing for rapid growth (rather than an early IPO) to try to get a head start on copy-cat entrepreneurs, CEO Cyrus Massoumi told CNBC. An IPO would presumably come after the nationwide rollout.

3) Big backers. ZocDoc has already raised $95 million since launching in 2008. $50 million came from well-known venture capitalist firm Digital Sky Technologies. What’s really interesting, though, is the source of another $25 million. Apparently, it came directly from Goldman Sachs (per Beta Beat). That’s an nontraditional move that shows Goldman really likes what they see at ZocDoc.

4) A viable business model. Unlike a lot of tech start-ups, ZocDoc has a well-defined, easy-to-understand business model: the company pulls in $250 a month for every doctor that’s listed on its site. Should ZocDoc firmly establish itself as the online leader in its niche, it would have the sort of steady cash flows most websites dream about.

One of my favorite parts about the company is that Massoumi – the company’s co-founder – seems to understand that it needs to stay laser-focused on doing one thing and doing that one thing very well.

“We have one of the best lists of practicing physicians in the country right now,” Massoumi told Venture Beat. “That is an incredibly valuable rolodex, and people are always asking us to partner with them on that data. But we believe our success comes from our single minded focus, and we’re sticking to that.”

Ignoring short-term gains at the expense of doing one thing very well is the key to success that we’ve seen at companies like Instagram and Pinterest. ZocDoc understands that, and my guess is it’ll help them make the transition from start-up to a company with true staying power.

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3 reasons to invest in a Kickstarter IPO

Kickstarter is moving from the geeky fringe into mainstream consciousness, and that has investors taking note. Here are three reasons to consider investing in a Kickstarter IPO if and when we see one.

It’s hard to walk a few steps at my office without hearing someone talking about the latest business idea they saw on Kickstarter.com. It’s a sign the site’s moving from the geeky fringe into mainstream consciousness. And it makes me wish I had the opportunity to buy Kickstarter stock. Here are three reasons to consider investing in a Kickstarter IPO (if and when we see one):

1) A built-in revenue stream. Cash flow is one of the biggest problems with tech start-ups. Couple a high-growth tech company with actual revenue, then, and you’ve got a hot commodity in the Silicon Valley.

Kickstarter has a simple way of raking in cash, too: it takes 5 percent of whatever gets raised. Now that we’ve seen a project pull in more than $6 million in days, Kickstarter’s generating real greenbacks.

2) Phenomenal growth. Kickstarter helped fund 3,910 projects in 2010. That was good for $27,638,318 dollars pledged, and a project success rate of 43 percent (per Kickstarter’s blog). One year later in 2011, Kickstarter funded 46 percent of its posted projects for a total of 11,836 projects worth $99,344,381. Kickstarter’s cut in 2011? $4.97 million.

Per VentureBeat, “Kickstarter is on pace to raise around $300 million this year, triple what it did in 2011.” $15 million of that would go straight to Kickstarter.

3) Investor interest. Deep-pocketed venture capitalists are excited about Kickstarter. When asked what private companies he was eyeing now that Facebook’s going public, Jason Jones, managing partner of High Step Capital, named three companies: Kickstarter, Etsy and Quora (per InsideIPO).

Kickstarter shares aren’t yet available on Secondmarket – a site where wealthy investors can buy and sell shares in private companies – but investors are excited for them to arrive. Interest in Kickstarter shares grew by more than 93 percent in 2011, Secondmarket says.

All that said, the only thing better than a Kickerstarter IPO might be an announcement that the company’s turning itself into a non-profit. That would keep costs down and goodwill up in the years to come. If we don’t get that, though, I’ll take the next best thing: Kickstarter stock.

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The unofficial tech IPO calendar for 2012

From Facebook to Twitter to Groupon, the planned tech IPOs in 2012 could be among the most exciting string of new public companies in years.


Social games maker Zynga is one of dozens of highly-anticipated planned Tech IPOs in 2012.

The tech IPO pipeline is officially clogged. Renaissance Capital claims there are 330 IPOs (across all industries) in the IPO pipeline looking to raise $180 billion. Renaissance predicts that capital raised from 2011 IPOs could fall 36 percent shy of last year’s $39 billion. Should the market recover, 2012’s IPO market will be massive, and there are lots of great tech companies eager to raise capital. Here’s our unofficial 2012 tech IPO calendar…


360Buy.com IPO (Jingdong Mall). One of the largest business-to-consumer sites in China, 360Buy.com often draws comparisons to Amazon. Revenue was expected to hit $4.4 billion in 2011. Expect that keep climbing as online sales in China rose 77 percent in China last year. See our post 3 reasons to invest in the 360Buy.com IPO (Jingdong Mall) for more.


58.com IPO. China’s largest Craigslist-like online classifieds site, 58.com filed for an IPO on June 20,2011. The site makes money by charging a small fraction of its posters for premium-placement on the site.


Angie’s List IPO ($75 million+). Angie’s List lets paying subscribers read reviews of local businesses and contractors. The company’s something of an anomaly in the fast-paced world of tech start-ups as it’s now in its 16th year of operation. During that time, Angie’s List has accumulated a database of more than 2.2 million reviews (per CNN) and has more than 800,000 paying members.


Alibaba’s HiChina IPO ($200 million+). A subsidiary of Alibaba.com Ltd., HiChina Group Ltd.’s something like GoDaddy.com. The company offers domain names, hosting accounts and website building tools for small businesses in China. An IPO will help finance expansion into new businesses including email and website design (per WSJ).


Bazaarvoice IPO ($85 million+). You’ve probably seen or used Bazaarvoice’s software without realizing it. The company sells its code to online retailers (like Best Buy and Macy’s), so those retailers can pull in online reviews of the products they sell. Bazaarvoice is expected to generate $64.5 million+ in revenue this year, and CEO Brett Hurt claims the company could stop expanding now and immediately become profitable.


Brightcove IPO ($50 million+). Brightcove offers a cloud-based video serving platform for paying customers. All told, they serve up some 700 million video streams a month (second only to YouTube) for more than 3,300 clients (per GigaOm). Unfortunately, the business doesn’t reap a huge amount of revenue. Brightcove will likely book somewhere in the neighborhood of $50 million in revenue this year.


Eloqua IPO ($100 million+). Eloqua makes it easier for large Web sites to run and analyze marketing campaigns. Specifically, the company’s analytics software allows businesses to predict how much revenue marketing campaigns will generate.


Facebook IPO. Now boasting more than 800 million registered users, Facebook’s IPO will rank among the largest IPOs of all time. The latest media reports peg Facebook’s IPO date as sometime late in 2012. Interestingly, though, SEC rules will require the company to start making public its revenue, profits and losses in April 2012 (since the company’s total number of shareholders now exceeds 500).


Gilt Groupe IPO. A flash-sales site that offers temporary discounts on luxury goods, one of Gilt Groupe’s smaller competitors (HauteLook) was recently acquired by Nordstrom, Inc. (NYSE:JWN) for $180 million. Contrast that with the much larger Gilt Groupe where revenue alone is expected to hit $500 million this year.


Groupon, Inc. IPO ($750 million+). A series of pre-IPO missteps may push Groupon’s IPO to 2012. The Chicago-based daily deals email marketing company generated $688 million in revenue during the first half of 2011. See our post 3 reasons NOT to invest in Groupon’s IPO for more.


Guidewire IPO ($100 million+). A 10-year-old company that develops technology for the insurance industry, Guidewire’s services help streamline claims by processing them online. The company generated revenue of $144.7 million in 2010. That was good for net income of $15.5 million. Guidewire will IPO under ticker symbol GWRE.


Jive Software IPO ($100 million+). Jive creates social networking software for corporations. And it counts some major companies among its clients – including Nike, Cisco and Toshiba. Revenue from each of their customers averages a whopping $7,874 a month (per OregonLive). See our post 3 reasons to buy shares in a Jive IPO (Jive Software) for more.


LivingSocial IPO ($1 billion+). In light of the recent turmoil in financial markets, LivingSocial has temporarily shelved IPO plans. The company is instead fishing around for private equity (per Bloomberg). The daily deals site faces a lot of competition in Groupon and Google, which recently purchased restaurant-review company Zagat and German daily-deals site DailyDeal.de.


MobiTV IPO ($75 million+). A video provider for mobile phones, MobiTV has contracts with all the major telecoms: AT&T, Sprint and T-Mobile. Their software gives mobile users the ability to download video or watch it on-demand via their phones. Of course, the merger between AT&T and T-Mobile could drive down revenue at the company. An IPO could help them expand internationally. See our post 3 reasons NOT to invest in the MobiTV IPO for more.


Qunar.com IPO. A China-based travel search site, Qunar’s majority-owned by China’s largest search engine, Baidu.com, Inc. (NASDAQ:BIDU). Qunar’s already a Top 100 site in China, and I expect the backing from Baidu will cement Qunar’s position as the leading travel site in China. See our post Qunar IPO: 5 reasons to invest in China’s travel site for more.


SecondMarket IPO. The rumors haven’t started flying about a SecondMarket IPO yet, but the company did start listing its own shares on its Web site. SecondMarket provides a marketplace for high-net-worth individuals and institutions to invest in private companies.


Trulia IPO. An online real estate search and marketing company akin to Zillow Inc. (NASDAQ:Z), Trulia announced IPO plans in February 2011. The site’s been doubling revenues year over year and has an estimated value of $700 million (per Inman).


Twitter IPO. Look for a Twitter IPO late in 2012 or early 2013. The ubiquitous micro-blogging site now claims 100 million active users. Questions remain about the company’s business model, but Twitter’s reach offers some tantalizing possibilities. See our post Twitter’s secret key to making money for more.


Vancl IPO ($1 billion+). An online-only clothing retailer in China, Vancl’s advertising campaigns blanket the Internet behind the Great Firewall. It seems to be working, too, as the company targets price-conscious consumers. Vancl comes from good pedigree, with the company’s founder, Chen Nian, having sold his last venture, Joyo.com, to Amazon. Joyo has since morphed into Amazon.cn.


Yelp IPO. Yelp provides local reviews for businesses and restaurants. According to CEO Jeremy Stoppelman, the company gets 63 million unique monthly visitors who add more than 1 million new reviews to the site every month. Yelp’s been particularly successful with its apps. The right partnerships could drive revenue growth for the company moving forward.


Zynga IPO ($1 billion+). Zynga, which makes social-networking games for Facebook, iPhones and Androids, is tentatively planning to IPO in November 2011. Don’t be surprised if Zynga’s IPO date gets pushed back to 2012, though. The company’s has perhaps the best financials of all the company’s on the list. As of March, the company held nearly $1 billion in cash and was generating cash flow of $104 million per quarter (per Fortune). See our post 8 facts about Zynga before the IPO for more.


Interesting 2012 non-tech IPOs: U.K. soccer team Manchester United.

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Facebook stock powers growth at SecondMarket

People want Facebook shares, and SecondMarket’s one of the few places they can get them, no matter what the price may be.

Business is booming at SecondMarket.com. The secondary exchange lets high-net-worth investors buy and sell shares in private companies including some of the tech world’s brightest lights; companies like Twitter, Facebook, Zynga and Groupon.

Over the past six months, the number of SecondMarket participants surged 152 percent to 53,000. Most of that’s thanks to interest in buying Facebook stock.

Facebook shares, which trade in weekly eBay-style auctions on the site, accounted for more than 40 percent of SecondMarket’s transactions last month, according to Bloomberg Markets.

While most of us would probably love to get our hands on some pre-IPO Facebook shares, there’s little transparency and even less liquidity on secondary exchanges. That’s one of the reasons we’ve seen eye-popping valuations on Facebook. One of SecondMarket’s largest competitors, SharesPost, cautions investors against blindly buying stock in trendy private companies.

In a single day of trading in January, SharesPost points out one group of investors bought a block of Facebook shares for less than $30 each. The same day, another group of investors spent $60 a share for Facebook stock.

Without access to proper financial statements, investors are taking on significant risk when they wade into secondary exchanges. And now it appears the SEC may be considering relaxing rules to make secondary trading easier. Bloomberg Markets reports that SEC Chairman Mary Schapiro indicated as much in a letter to California Representative Darrell Issa.

Schapiro wrote that she was considering raising the limit on the number of shareholders a private company can have without reporting financial information to the commission. That number’s currently 499. If it’s raised significantly, volume on private exchanges will likely spike as employees at companies like Facebook and Twitter may be given more leeway to sell off shares they’ve accumulated.

That would probably drive up Facebook shares higher – even without an accurate look at the company’s earnings and financial prospects. It doesn’t seem to matter right now, though.

“People aren’t buying Facebook for its revenues in 2010,” Wedbush Inc. analyst Lou Kerner tells Bloomberg Markets. “They’re buying it for what it’s going to be doing in 2015. We believe if it were public, it would be worth in excess of $100 billion.”

People want Facebook shares, and SecondMarket’s one of the few places they can get them – no matter what the price may be.

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Crowdcube: How to invest in tech startups

Crowdcube.com gives investors the opportunity to invest as little as £10 ($16.40) in private tech start-ups long before they’ve hit the IPO stage.

There’s something infuriating about getting locked out of investing in high profile tech companies like Facebook and Twitter by virtue of being too broke. If you’ve got a net worth of $1 million or more, you’re more than welcome, though, to sign up to buy shares in Facebook and Twitter via secondary exchanges like SecondMarket.

A small UK-based Web site is trying to change that with last month’s launch of Crowdcube.com. The site gives UK investors the opportunity to pony up as little as £10 ($16.40) to invest in private tech start-ups and small businesses long before they’ve hit the IPO stage.

“We want to enable people to have a real share – real equity in the business,” Luke Lang, one of Crowdcube’s co-founders tells GrowthBusiness. “We want to make investing open to everyone so that the ordinary man or woman in the street can invest in a limited company.”

Crowdcube takes Kickerstarter.com, which allows individuals to contribute cash to creative projects in exchange for gifts or recognition, a step further by offering up the real deal: equity. Prospective investors can peruse fully-developed, vetted business plans and video pitches as well as interact with entrepreneurs in Crowdcube’s forums before deciding to invest.

Pretty snazzy. As of today, there are 13 start-ups soliciting investments on Crowdcube. They range in scope from an online auction software developer to a mobile advertising company and a “Fairtrade certified bodycare products” manufacturer.

The business plan that has me most excited, though, is Crowdcube’s itself. The company’s currently waiving its £250 ($410) listing fee for entrepreneurs. If a start-up hits its funding goal, Crowdcube skims 5 percent off the top in addition to a £1750 ($2,871) legal fee. A lot of 5 percent cuts could quickly add up if Crowdcube hits critical mass. Now, I just wish the site would offer up equity in itself for early-stage investors.

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JP Morgan’s new media fund forces out the little guy, again

JPMorgan Chase’s fund is being shopped around to wealthy investors while the rest of the world gets to wait for what will likely be a bloated IPO share price at some undetermined date in the future.

JPMorgan Chase & Co. (NYSE:JPM) appears to be readying a New Media investing fund that would give high net worth individuals access to shares in late-stage tech companies like Facebook and Groupon. The fund, which was first reported by the Wall Street Journal, would focus on social networking and other new media companies that are nearing IPOs.

The move echoes Goldman Sachs Group’s (Public, NYSE:GS) $1.5 billion round of financing for Facebook. Goldman kept $500 million worth of shares in the social networking company for itself, then offered the rest to wealthy investors outside the U.S. Likewise, JPMorgan Chase’s fund will likely get shopped around to wealthy investors while the rest of the world waits for a bloated IPO share price at some undetermined date in the future.

It’s yet another advantage that the wealthy have over small-time retail investors. Since companies like Facebook aren’t yet publicly traded, shares are only available via financing deals directly with the companies or on secondary markets including SharesPost and SecondMarket (read my post on How to buy stock in private companies for more).

These secondary exchanges provide a place where early-stage investors or employees at companies like Facebook can sell their shares to Accredited Investors or Qualified Purchasers. To be deemed an Accredited Investor, you’ve got to have a net worth of $1 million or more. If JP Morgan’s plan comes to fruition, it would give even more wealthy investors access shares in red-hot private companies – not just Facebook but likely others as well including Twitter, LinkedIn and Pandora.

“The sense that smaller investors will get the higher price when (these) companies come public and that the smaller investor is not having the same opportunities, feels just wrong,” writes a commenter on an article at DealBook.

My sentiments exactly. The whole scenario has part of me wishing I could invest in the New Media fund while the other half hopes that the valuations in these private companies get pushed so high that the shares crumple at IPO.

If nothing else, the frenzied valuation spike in private social media companies should give you pause before you place a buy order when the shares go public – if they ever do.

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How much would a Twitter IPO be worth?

Twitter’s pre-IPO market cap of $3 billion is well below the $50 billion valuations we’ve heard tossed around for Facebook, but it’s certainly not chimp change.

I’m not as pessimistic as most when it comes to the future of Twitter. Yes, it’s a nebulous site for outsiders who don’t see the point of “tweeting,” but that doesn’t mean Twitter doesn’t hold value now, and it definitely doesn’t mean it won’t hold value in the future.

Twitter has profoundly changed the way the world communicates, even if you haven’t realized it yet. I’d wager that any professional journalist worth his salt uses Twitter on a daily basis. If you’re in the business of information gathering, you just about have to use it.

Let me give you a quick example of how its impacted my own life: I was at work a few months ago leaning back in my chair at my desk. I was on the fifth floor of our office building when I suddenly felt like my vision was getting blurry and I was having heart palpitations. Turns out, it was nothing of the sort.

I was feeling shockwaves from an earthquake. I didn’t realize what it was until some of my co-workers came out of their offices and suggested we’d just experienced an earthquake. I went to Twitter.com and typed in “Earthquake.” Within a few seconds I was combing through literally thousands of tweets that described an earthquake – and it appeared to be centered in Quebec, Canada.

Moments later, the tweets pointed me toward an official government site that confirmed the quake that had literally happened just minutes earlier. Everyone in my office was asking me to forward them the links I’d found on Twitter. Now, that’s communication!

Once the rest of the world starts turning to Twitter in a similar fashion, they’ll start to realize just how useful the service is. Granted, it’s a long way from making money, but so was Google when it first got off the ground.

OK. So how much would a Twitter IPO be worth?

That brings us to the valuation question. According to TechCrunch, Twitter’s most recent capital-raising forays have valued the company somewhere around $3 billion. That’s about three times what they were valued at a year ago.

Late in 2009, Twitter forecast revenue of $120 million in 2010. If the company’s value has tripled in the eyes of venture capitalists, they’ve probably exceeded those estimates. A market cap of $3 billion is well below the $50 billion valuations we’ve heard tossed around for Facebook, but it’s certainly not chimp change. And while Twitter’s IPO is probably a long way off, I plan to be in line for shares when they hit the market – even if their revenue isn’t off the charts.

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How to invest in Facebook

Investors expect Facebook to go public with an IPO sometime in 2012. You can get in even earlier though if you’re an accredited investor with $100,000 laying around. EB Ventures has created an LLC (Zoom Ventures) that allows individuals to invest in Facebook’s private shares.

One of the hottest tech investments in the world right now isn’t even a company that trades on public exchanges. To buy stock in Facebook, you’ve got to get your hands on private shares, and that means stepping outside the bounds of your normal brokerage account and turning to a specialty dealer like SecondMarket or a custom LLC created explicitly to invest in a specific private company.

BusinessWeek ran a story late last week detailing a newly created LLC called Zoom Ventures that exists solely as an investment vehicle for shares in Facebook. The LLC was started by EB Exchange, which is buying as much as $15 million in Facebook shares. Then, they’re selling units in the LLC at $10,000 each. The catch? The minimum investment is $100,000, and the LLC can have no more than 99 investors.

Also, you’ve got to get approved and be an accredited investor (i.e. a wealthy gent or gentlewoman) to join in. For their troubles, EB Exchange will extract a 5 percent fee when you join the LLC, and they’ll get “another 5 percent when Facebook shares are distributed after an initial public offering or acquisition.”

The article speculates that Facebook will go public sometime in 2012. Wish we could all be there!

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How to buy stock in private companies

if you have lots of cash to burn, and you’re eager to buy stock in a company like Twitter or Zynga, SecondMarket might be a viable option. There are also lots of other companies out there that offer access to buy shares in private companies including Campbell Lutyens, Cogent Partners, Probitas Partners and Triago.

One of the best ways to make money investing is by getting in early. If you can get in on the ground floor of a great company long before the public has access to stock in said company, you could stand to make lots of money when the IPO finally rolls around.

Take the case of Google, for instance. When the tech giant went public in 2004, some 900+ employees became paper millionaires overnight. Wouldn’t you have liked to get in on the action?

Thanks to the Internet, it’s easier than ever to get access to shares in private companies through what’s called the secondary markets. Unfortunately, there’s a catch: you’ve got to have lots of cash to do it… I wrote recently about my failed attempt to buy stock on SecondMarket, a popular online marketplace for buying and selling illiquid assets. To join in the fun, you’ve got to have a net worth or joint net worth of $1 million. Either that, or you’ve got to have an income of at least $200,000 a year. I don’t fall into either category yet. So that’s means I’m out of luck.

Still, if you have lots of cash to burn, and you’re eager to buy stock in a company like Twitter or Zynga, SecondMarket might be a viable option. There are also lots of other companies out there that offer access to shares in private companies. Here’s a handful to name just a few: Campbell Lutyens, Cogent Partners, Probitas Partners and Triago. Where there’s a will (and a lot of capital), there’s always a way to buy stock in a private company. It just takes some persistence.