What is your minimum investment size?
Our minimum investment varies with each fund introduction
How are the investments structured?
Investors are Members of a fund (organized as an LLC) that purchases a specific company’s Shares or the economic interests in shares. Most funds we introduce will have a manager that will establish a Series of Interests for the purpose of making a separate and distinct investment in a specific company or companies identified by the Manager; purchasing securities in such company or companies from secondary sources (directly or through forward purchase contracts); or investing in interests of investment funds, special purpose vehicles and other entities (including investment funds and other entities affiliated with the Manager or its affiliates) whose investment portfolios are comprised of one or more companies consistent with the Fund’s general investment focus. Each Series will remain segregated from each other Series.
Is it difficult to find a shareholder to part with their equity?
Selling shareholders are current and former employees, early investors, and advisors. They are typically selling only a portion of their holdings in order to 1) cover costs associated with exercising and paying taxes on the remainder of their shares 2) life events such as purchasing a home or preparing for a child and to 3) diversify their holdings.
Why can’t I just buy the shares directly from the shareholder?
Selling shareholders are current and former employees, early investors, and advisors. They are typically selling only a portion of their holdings to 1) cover costs associated with exercising and paying taxes on the remainder of their shares 2) life events such as purchasing a home or preparing for a child and 3) to diversify their holdings.
Do I own the stock in these companies?
No, you’ll be a member of an LLC that owns either the shares or the participation interests in the economic upside and downside of the shares.
How do you price the shares?
The industry uses the last round of financing and expected IPO range as a pricing guidepost. Other factors may include investor demand, access to the company, other secondary transactions that have occurred and publicly available information.
Can you provide the company’s financials, exit strategy, and prospectus?
Unfortunately, our network does not have access to the company’s most recent financials, or their investor presentation. Our networks leverage the due diligence performed by the company’s most recent investors and base our offerings on the price those investors paid.
What kind of paperwork do I receive as an investor?
Most funds paperwork is similar to that of any fund investment, but simpler. An investor would sign a Subscription Agreement, through which they would purchase an interest in the fund (company). In addition, and investor would also complete a W-9 (W-8 BEN for foreign investors) and Suitability form once. On an annual basis, Investors would receive a Schedule K-1 that updates them on their investment. All legal and financial documents are prepared with the involvement of outside counsel or accountants, as applicable.
Once I invest, will I receive any formal or legal documents stating my investment?
Yes, most funds send your countersigned Subscription Document indicating your membership in the Fund. You should also receive a Welcome Letter from the managers outlining the Series of participation and breakdown of your investment.
How is my investment treated for tax purposes?
Your investment in most funds would be taxed like any other fund investment. Our networks funds are taxed as partnerships, meaning that the fund’s gains and losses would pass through to its investors. Generally, if an investment is held for more than one year before its disposition, any income resulting from that investment would be taxed at the long term capital gains rate. On an annual basis, Investors will receive a Schedule K-1 that updates them on their investment. Note: we are not tax experts and have provided this discussion for informational purposes only and not as personal tax advice. You should consult your tax advisors for guidance specific to your circumstances.
Will I be receiving any financial updates for my investment? How often?
Yes. Most funds have a third party Fund Administrator, who should issue K1’s annually. Our network should also update you on any material impact to your investment (company news, new funding rounds, secondary transactions or indicators to new valuation).
What is the “right of first refusal” clause?
Right of first refusal (ROFR or RFR) is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party. In short, the Right of First Refusal is the company’s right to purchase the shares from the shareholder on the same terms asa third parties bid. The company has up to 30 days to make the decision upon a third party submitting a Bona Fide Offer via a Transfer Notice (they may also waive their right, in which case we can proceed immediately).
How long can I hold these shares?
Following an IPO lockup period, the funds you invested in can transfer the shares to your brokerage account for you to hold or sell at your preference. When can I expect the company I’m in investing in to go public or get acquired? We cannot guarantee an exit nor a timeline for any of your holdings. However, the majority of investment opportunities are companies who have received institutional financing and have a typical investment horizon of 2-5 years.
Do I have the option to sell before the company goes public? What are the methods if I want to exit or cash out my investment?
While our network views the membership interest as a long-term commitment, it may be permissible to sell your interest if needed and upon approval of the manager. We would be able to accommodate the situation by working with you to find a replacement buyer in the fund. Your LLC ownership is transferable, and we can market it to our investor base, but we cannot guarantee we’ll be able to find a buyer.
The company I invested in has an Initial Public Offering (IPO): what happens next?
If a company series that you’ve invested in goes public, our network would register the shares and work with your brokerage account’s custodian to transfer the shares. Typically, the common stock is subject to a 180-day lockup, so we would facilitate this transfer after this period.
Can non-accredited investors invest?
Our network presents private offerings, open to accredited and qualified investors only.
Can I invest with a self-directed IRA?
Yes. There are funds in our network that accomadate investments from self-directed IRAs.