Dropbox Shares Offered at 34% Discount in Secondary Market

If I'm an employee at [HIGHLY VALUED PRIVATE COMPANY] - this looks REALLY appealing to me, to dump my shares for at least a nice guaranteed cash out now.

So many VC rounds protected with liquidation preferences at a valuation that the market probably ends up shredding if there's an IPO or a buyer comes along to acquire the company. These latest devaluations certainly wouldn't help with morale and I'd get nervous thinking about my shares eventually being worthless if the company just sort of tinkers in the private market much longer.

I also tend to be relatively risk averse though, so I'm curious what others here would do.

Is this a normal discount? I thought a typical one was more like 50%, making this a good deal.

As others have noted, you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred. A few months ago when I looked into investing in Palantir via EquityZen/Sharespost, the share price being offered valued Palantir at between 25-30% less than their most recent funding round valuation of $20B.

If anyone's interested in acquiring pvt company shares in the secondary market, here's what I learned: * You have to be an accredited investor (i.e., net worth of over $1M excluding residence; or income of >$200K individual/>$300K married for the last 2 years and reasonable expectation that this income level will be sustained this year).

* You don't actually own common stock of the company (e.g. Palantir). It actually works like a mutual fund. You invest in an LLC that owns the stock. You get shares in this fund/LLC that correspond 1:1 to common shares in Palantir.

* There is usually a minimum investment amount e.g. $50K or $20K.

* EquityZen/Sharespost charge a commission (of about 5% iirc; 1 of them charged more than the other but had a lower minimum investment amount). They are managers of the LLC and investors have virtually no rights even though they are members of the LLC.

* When the company IPOs, your LLC shares are converted to the same number of company shares. This is common stock, and subject to the same lockup restrictions that employee shares are. That means you can't sell until 6 months after the IPO.

* There is no liquidity. EquityZen and Sharespost differ in this a little bit. But basically you can't sell your shares in the LLC without approval from EZ/SP; they can veto it and they can also require a holding period of 1 year.

* While the transaction is blessed by the underlying company, they don't reveal any information about financials or risks like they would in an IPO prospectus. You are investing blind.

In my opinion the biggest problems with such investments are (1) illiquidity, and (2) the fact that shares are subject to 6-month lockup post IPO.

EDIT: formatting.

> the real story will be whether or not the shares actually sell.

As the saying goes: There ain't nothing that price won't fix.

The bigger story is that Dropbox is trending down in general. Look at Google Trends[1] for Dropbox searches. I used to have files. But now I don't really have any files. I use Spotify for music. A collection of streaming services for movies and shows. Google Photos for my photos. Google Docs for storing my spreadsheets and "word" documents and Google Drive to dump some useful PDF files. I don't pay for any storage service anymore.

World has changed since Dropbox came out and it has become less relevant. In my case it is completely irrelevant.

[1]https://www.google.com/trends/explore#q=Dropbox