Most people have never heard of either, and those that have heard of at least one it is generally AngelList. But does anyone know what either one does and their usefulness? I get asked a lot of times about using one or both of the sites, where most companies don't have a clue what either does. I am a supporter of using either site assuming you can and know what to use it for.
Second Market is primarily for reserved for companies that need to provide liquidity to previous investors or to employees. Thus, these companies have already raised capital and instead of going public, they can remain private and still provide their prior investors an exit strategy and liquidity.
SecondMarket is not for a company raising capital, but for people who own the company's stock to sell it or for accredited investors to buy stock from other owners. The stock is not sold by the company. For example, BigTimeTech Company is a startup and could not sell stock on Second Market to raise money, but if Founder John Doe wanted to sell some of his shares he could do so on Second Market if the company was approved to participate on the Second Market site. SecondMarket would be a viable option for BigTimeTech Company once it has raised capital and needs to provide investors with an exit.
The counterpart to SecondMarket is AngelList. AngelList is for startup companies raising capital. AngelList allows companies to be listed on their site and be viewed, or contact, potential investors. So which is more important? They both play a key role, but undoubtably SecondMarket has the most staying power. The company operates in a niche market, where AngelList competes with various other capital raising sites and Angel investors - not to mention the potential entry of crowdfunding.
Related links: SecondMarket v. AngelList
