This year EquityZen celebrates a decade of building private markets for the public. This is a big milestone, one that we are immensely proud of, and a moment that prompts reflection. We find ourselves looking back fondly on the successes, failures, lessons and unforgettable moments that have made up the past ten years. There have been many firsts like our first hires (Nat and Adam!), office (FiDi!), transaction (ZocDoc!), but the seconds, thirds, and 100ths have been just as rewarding. As we look back, we also look forward and are filled with hope and excitement for what is to come next.
A decade ago when we started this business the JOBS Act had just passed, enabling companies to stay private if they had less than 2,000 shareholders. Subsequently, Reg CF enabled thousands of people to participate in the private market through first angel investing. These regulatory changes laid the groundwork for the need for a larger and more inclusive private secondary market. (Angel) investors, used to buying a stock on Monday and able to sell on Thursday, now found themselves holding their positions for five to 10 years, and the need for a secondary market was clear. The macro environment further fueled the growth of this market as a 40-year low in publicly listed companies created demand for liquidity from shareholders and demand for access from investors.
Yet despite the market opportunity, it was an uphill battle. The “wild west” of secondaries that surrounded Facebook’s IPO left scar tissue for the management and boards of many private companies. Secondaries were taboo, widely seen as “company unfriendly”. To say the least, it wasn’t the friendliest environment to convince companies about the importance of secondary transactions. Yet while there was plenty of discouragement, we couldn't shake the feeling that the market needed a better solution. We steadfastly believed that secondaries would benefit employees, investors and private companies themselves. So we carried on.
Within a few years our product-market fit was clear as the private market continued to grow and our value continued to be proven. Stories of shareholders using their liquidity proceeds to send their kids to college, pay down debt, support family members or buy homes and investors reaping the benefits of successful investments validated our business. As the private market grew, so did our business. We grew our team, improved our product, launched new investment offerings and gained credibility within the market. We survived and grew through a pandemic, and continued to provide better liquidity solutions for all market constituents. Our keen focus on building this market allowed us to dodge the bullets of chasing each passing fad from ICOs to NFTs and SPACs. From stratospheric growth to inflation, rising rates, wars, bank collapses and more we carried on. While the market certainly changed, the need for a democratized secondary market did not.
In the past decade we’ve seen competition increase as the importance of secondary transactions has been accepted by the market. Companies who had previously asked us to pause trading in their names, asked us to be preferred providers of liquidity for their stock. Some private companies who were once weary, are now some of our closest partners, realizing the value of EquityZen’s approach as they aim to save time and money while improving employee morale and retention. In a quiet IPO market, this is all the more important. Larger financial institutions who initially ignored this market are now seeing the opportunity as well. And though our business has grown to serve a broad range of secondary participants, both large and small, we have remained focused on providing the best solutions and lowest minimums to the group most underserved in the private market: individual investors and shareholders. Doing so has challenged us to build a scalable, tech-enabled business that can handle the thousands of individual investors (fondly known as “team little check” by EquityZenners) who come to EquityZen to access the private market. Just last year we saw our 10,000th $10,000 transaction - a feat simultaneously unimaginable and the very image of our vision when we started back in 2013.
One of the most rewarding things has been watching our team grow. We simply could not accomplish our lofty goals without a team that shows up each day with a drive to improve and serve our clients above all else. In addition to developing their careers, EquityZenners have developed lifelong friendships. Seeing each of them level up and grow in their careers and as people remains immensely satisfying. I am incredibly grateful to our team who has helped us on this mission over the past 10 years, including current employees who are building for the next 10 and beyond.
So what lies ahead? While we can’t predict the macro environment, we do believe a few major trends will shape the market. With over 14 million accredited households in the US, there is a huge opportunity to increase access to the private markets. As companies stay private just as long (if not longer) then when we started, the importance of private market investing to drive investment returns grows. While we’ve reached the early adopters, we want all accredited investors to benefit from the value creation in the private markets. Broadening access and increasing awareness and education will be core to accomplishing this. We want more people to join the private market movement and hope that future regulation, like the Fair Investment Opportunities for Professional Experts Act will reduce the barriers to this access. We’ll play our part by continuing to execute on our mission and serve our clients with better products, better technology and best-in-class service as we have for the last decade.
For shareholders, we believe liquidity will become an expected perk, like 401Ks, for large private companies. EquityZen has made it easy and efficient for private companies to enable liquidity. Adoption will increase and become a tablestake. In tandem, we expect to see an increase in employee activism as employees learn and understand they have a right to act on their shares. This hopefully ends the era of liquidity only for some. Fair and transparent rules for all will become the norm and we’ll be here to support the companies dedicated to fairness.
We have no doubt that the next 10 years will be transformative for the private markets and we’re in this for decades to come. While we can’t pretend to know what the private markets will look like in 2033, we’re proud and motivated to work on something that has that kind of staying power. Otherwise, what’s the point? While some say startup years are like dog years, we believe EquityZen is a mere college graduate with a whole life to live ahead of it. And we know from experience that a lot of fun (and change) comes in your twenties and thirties. To all that is to come, we remain excited, grateful and focused on continuing to build private markets for the public.
As we celebrate the past decade and look forward to the decade ahead, it felt like the right time to explore how EquityZen comes to life and rebrand ourselves in a way that reflects who we are and who we aim to be. In all we do, we aim to act as a champion to our clients, empowering them to be a part of the future they want to see. We are excited to soon share our new brand, which embodies the connection and trust that we’ve always sought to deliver to our clients today and into tomorrow.
More to come!
Disclaimer: Investment opportunities posted on this website are "private placements" of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. Investing in private companies may be considered highly speculative and involves a high degree of risk, including the risk of substantial loss of investment. Investors must be able to afford the loss of their entire investment. See our Risk Factors for a more detailed explanation of the risks involved by investing through EquityZen’s platform.
