So you invested in a private company through an EquityZen fund. Exciting! But what does this actually mean? Here we breakdown what you own when you invest via a standard deal in an EquityZen Single Company fund.
Our Single Company funds allow individual accredited investors to invest in private companies aiming to innovate with investment minimums as low as $5,000. By aggregating investors into one fund vehicle, our Single Company fund acquires shares directly and acts as a single entrant on each private company’s capitalization table. Single Company funds are the most popular investment product on EquityZen’s investment platform.
When investing in a Single Company fund, investors are purchasing membership interests in the fund which in turn acquires shares of one specific company at a designated price per share. Investors then own their pro-rata right to the shares of that company owned by the fund. Each Single Company fund is a special purpose vehicle (SPV) structured as a Delaware limited liability company (LLC) that is established to purchase and hold a single asset: shares of a specific private company.
This fund structure is designed to protect investor ownership rights to the shares of the specific private company held by the Single Company fund. This ownership is formalized through the Subscription Agreement and related transaction documents that you sign when you complete the investment process, all of which are accessible on your Portfolio page.
We also perform diligence on each transaction to ensure our Single Company funds purchase the underlying private company’s shares. Critically, each private company approves the transfer of shares to the respective Single Company fund, affirming our investors’ indirect ownership. Over the past 13 years we have built relationships with over 450 private companies, enabling us to facilitate over 47,000 investments in pre-IPO companies via our Single Company funds.
The pre-IPO market doesn’t need to be complicated or opaque. Investors should always do their homework to ensure they understand what they are investing in and understand risks associated with these investments. At EquityZen, we remain committed to providing access to the private companies innovating our world – and doing so in a way that aligns with the interests of our investors, sellers and private companies. EquityZen Securities is a registered broker-dealer in good standing with FINRA and the SEC.
Interested in learning more about pre-IPO investing and the key things investors should know? Explore these additional resources from our blog.
https://blog.equityzen.com/beginners-guide-to-pre-ipo-investing
https://blog.equityzen.com/guide-to-investing-in-pre-ipo-secondaries
https://blog.equityzen.com/how-to-choose-a-pre-ipo-platform-5-key-considerations
https://blog.equityzen.com/what-to-look-for-in-a-pre-ipo-investment-platform-equityzen
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