What is the difference between primary and secondary market?
On the Funderbeam platform, investors can invest in a company two ways: one is by the primary market and the other by the secondary market.
The primary market is where investors buy shares of the company directly from the company. The securities are issued for the first time by the company itself to the investors. The price of the securities is fixed.
On Funderbeam, it means investing into an open syndicate on the syndicate page. You can access all open syndicates on the invest page.
The secondary market is where investors buy into the company via trading shares with existing investors. Secondary market provides liquidity for the investors because the securities are sold by one investor to another. The prices on the secondary market vary, depending on the demand and supply of the securities.
On Funderbeam, this means exchanging fiat currency for shares on our marketplace. You can access the secondary market on the trading page.
To conclude, if you are buying company shares from the primary market, the company gets new money in. As an investor, it would be wise to look at what they plan to use those funds for. Read more about it here. Buying from the secondary market means the company won’t get new money, the exchange is between two investors only.