Chuk Okpalugo | August 10, 2017
Redfin (NASDAQ: RDFN), the Seattle-based tech-enabled residential real estate brokerage, completed its Initial Public Offering (IPO) on July 28, 2017. By providing investment access in the company pre-IPO in 2016, EquityZen’s platform allowed several qualified investors to achieve average returns over 3x in excess of those of public market investors who continue to hold their shares.
EquityZen’s platform makes investment available in established, growth-stage private companies 2 – 4 years before the IPO. With private companies today taking, on average, over 10 years to go public compared to four years in 1999, much more of a company’s growth occurs in the private markets. EquityZen’s platform can provide a massive advantage to private investors over those who wait until the company’s shares are available for investment in the public market. For a more detailed analysis, read the Redfin Case Study.
Note: returns from investments in Redfin are not necessarily indicative of returns achieved on all investments on the EquityZen platform.
Redfin has had a strong public markets debut. As of last Friday (Aug 4th), RDFN closed at $25.84 per share after pricing the IPO at $15.00 per share. However, the earliest price available to the typical public investor was the opening price on the first day of trading, $19.56 per share (the IPO Open price). Returns on an investment at the IPO Open price would be marked at 32% at recent prices but even investing at that price is theoretical, as it requires quick execution and some luck to invest right at the open. Such is the constraint of investing solely in the public market.
EquityZen breaks this constraint by allowing investors to access opportunities in growth-stage companies backed by premier VCs before they start trading on the NYSE or NASDAQ. In Redfin’s case, EquityZen’s platform enabled several investors to invest in Redfin in late 2016 at what amounted to a dollar-weighted average price of $12.00 per share. As a result, EquityZen clients are able to mark a 115% return at recent prices of $25.84, over 3x in excess of public market investors who continue to hold their shares.
|Performance of Redfin Investments Facilitated via EquityZen Platform
Source: EquityZen, Yahoo Finance
As with all deals on EquityZen, the Redfin transactions were conducted with approval from the company – this means actual shares were transferred. Since shares are transferred, rather than synthetic contracts such as derivatives, EquityZen investors can rest assured that the transactions are above-board and without counter-party risk.
On the principles of building a trusted, secure, and transparent solution, EquityZen has led the wave of Secondaries 2.0. Building on top of these principles, EquityZen is proud to have conducted 2,000+ private placement transactions in 70+ pre-IPO tech companies, which are among the largest and most reputable private firms. In fact, one in three of the largest 50 unicorns (private tech companies worth over $1B) consider EquityZen a liquidity provider. EquityZen’s platform allows accredited investors unique investment access with a minimum investment of $20,000. If you are an accredited investor, you too can research investment opportunities. Get started here.
(You can determine whether you are an accredited investor by going here. If you qualify, you can join 10,000+ accredited investors from 30+ countries who can access, research, and invest in private companies on EquityZen’s investment platform.)
Redfin Case Study
Redfin Path to IPO
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