Mark Zuckerberg’s majority control over Facebook Inc., a model adopted by founders of Zynga Inc. and Groupon Inc., has become the new normal in Silicon Valley as entrepreneurs’ desire to hold sway trumps shareholder power.
Private trading that helped spur paper gains of 50 percent or more in companies such as Facebook Inc. and Twitter Inc. is raising questions about how much investors know about their financial condition.
Venture capitalists have long distinguished themselves from private equity firms, claiming that they help build companies, avoid borrowing money and pose no risk to the broader economy. Regulators now agree with them.
Trading of privately held companies such as Facebook Inc. is likely to surge 51 percent to almost $7 billion this year, drawing new exchanges such as Xpert Financial Inc. and Gate Technologies LLC to vie for commissions.