Investments in private companies can lose some or all of their value. Most of the investments have no explicit expectation of payments, dividends, or other cash flow. Investments via EquityZen are high-risk investments in private companies. There are no ongoing AUM fees or carried interest. How does EquityZen make money?ĮquityZen charges a one-time fee when you invest, from 3-5% of the invested amount (which is charged on top of the investment amount, so for example if you were to invest $50,000, you would end up transferring $52,500 to EquityZen). During the life of the SPE, investors will receive an annual K1 for tax purposes. If and when the company goes public, after a lockup period investors will receive actual shares in the company deposited into their brokerage account. What do you get when investing with EquityZen?Īlthough the seller is selling company stock, that stock is in turn held in special-purpose entity (SPE) LLC, and investors receive a membership interest in that LLC. In theory, given their operating history and track record, these companies are closer to IPO (or other liquidity event) than a typical startup investment. Investments are in late-stage companies, primarily tech businesses, including many that are household names (you must create an account and certify as an accredited investor to browse open offerings).
Yes, EquityZen is “legit” in the sense that it is a legitimate, regulated business and a legitimate alternative investment opportunity for accredited investors.ĮquityZen is among a growing crop of crowdfunding and online alternative investment platforms, most of which have launched in the wake of the 2012 JOBS Act. Investments are offered under SEC Reg D and available only to accredited investors Is EquityZen legit? EquityZen matches sellers and buyers (although influenced heavily by the most recent financing round, the sale price is ultimately determined by the seller), and then coordinates all of the (substantial) paperwork and process associated with the transfer, which importantly is approved by the pre-IPO company itself. You can read more about the criteria we use to review investment platformsĮquityZen is not technically “crowdfunding”, but is an online alternative investment platform offering a secondary market to investors, advisers, and employees of startups who are looking to sell some or all of their stock. Including how the alternative investments on EquityZen are structured, and what your potential returns might be. This EquityZen Review will help you learn more about EquityZen's investment offerings, Startup investments are already inherently risky and illiquid, and additional uncertainty around cannabis industry adds to that risk.EquityZen charges up to 5% of the amount invested.Investments are not direct stock ownership (an SPE is used).
0 kommentar(er)
