Frequently Asked Questions

Browse our most common questions below or contact us directly to have a chat, we’re here to help.


EquityZen allows only Accredited Investors per the SEC definition. More information on the definition of an Accredited Investor can be found here: www.investor.gov

No. EquityZen provides liquidity to private company shareholders and does not facilitate fundraising for companies.

Our minimum investment size is $20,000.

You will be charged, through EquityZen Securities LLC, a one-time Sales Fee, which generally scales based on the size of your investment. Investments up to $500,000 will be charged a 5% fee; investments of $500,000 up to $1 million will be charged a 4% fee; and investments of $1 million and up will be charged 3%. For example, if you were to invest $50,000, your total wire would be $52,500 ($50,000 + 5% x $50,000). Currently, we do not charge Carried Interest nor a recurring management fee on non-actively managed funds. EquityZen Securities LLC is a SEC-registered broker-dealer and member of the Financial Industry Regulatory Authority. EquityZen Securities LLC will ensure that all transactions are completed in compliance with applicable securities laws. The Sales Fee is subject to partial or complete waiver by EquityZen Securities LLC and/or its affiliates.

The fee structure is set and the terms must remain the same for all investors in a given Fund.

Live offerings are offerings that are currently available on EquityZen for investment, you can learn about the specifics of a given deal (such as underlying share price, valuation, price history, revenue estimates, and a capitalization table) on our platform. Preview Offerings means that we are gauging investor interest in that company. You can indicate that you're interested in investing in that company by clicking the company's tile and then pressing "I'm Interested".

Investors are Members of a fund (organized as an LLC) that purchases a specific company's Shares. EquityZen acts as the Managing Member of this fund. The assets owned by the fund (and its Members) are the Shares which the fund has purchased from shareholders via a Share Transfer.

No, we purchase fully vested shares of companies. In some cases, our shareholder has not yet exercised their stock options. As we only transact on fully owned shares, we would require the seller to exercise these options before proceeding. Once the company turns around their exercise and issues the share certificates we would move forward with a share transfer.

The majority of our shareholders find us. We enter into a Letter of Intent to move forward with us on a transaction once we have found buyers. Our sellers 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.

Secondary investments in private companies require much more legwork than your typical public stock transaction (for example on Fidelity or Charles Schwab). For one, every transaction must go through the company when shares change hands (imagine telling IBM or Microsoft every time you bought their shares). And the process requires providing specific language governing the transaction; each company's process is different. Finally, a number of documents must be compiled by the shareholder (a lot that shareholders don't even know about, which is why we made a shareholder checklist on our blog) to ensure the transaction is fully compliant.

Yes, we work with international investors all the time. Our investment opportunities are, however, only available to accredited investors per SEC Regulation. As an international investor, you will need to provide a copy of your passport, proof of residence and a completed W-8 form following the transaction for our records. Please note that due to compliance reasons, we may not be able to accept investments from the following countries:

Balkans, China (excluding Hong Kong) Myanmar, Belarus, Burundi, Central African Republic, Cote d'Ivorie, Cuba, Democratic People's Republic of the Congo, Lebanon, Liberia, Libya, Somalia, Ukraine/Russia, Venezuela, Yemen, and Zimbabwe. *This is not an exhaustive list. Foreign investments will be reviewed on a case-by-case basis.

Due to comprehensive sanctions, we cannot accept investments from investors in the following countries: Crimea, Iran, North Korea, Sudan, and Syria.

Yes. EquityZen welcomes investments from self-directed IRAs like Millennium Trust Company and IRA Services.

EquityZen is unique in that we account for the company whose shares are being transacted as a key stakeholder in the process. Unlike other platforms, we only facilitate company approved deals, removing the risks for all parties associated with transacting outside of company auspices.

EquityZen takes a technology-driven approach, allowing for secure transactions with audit trails, and also reducing costs.

No, you'll be a member of an LLC that owns the shares of the company.

We use the last round of financing's pricing as a guidepost. Ultimately, the seller chooses the price at which an opportunity is listed on the platform. Other factors include investor demand, access to the company, other secondary transactions that have occurred, publicly available information etc.

Unfortunately, we typically do not have access to the company's most recent financials, or their investor presentation. We leverage the due diligence performed by the company's most recent investors and base our offerings on the price those investors paid. Any information that is provided regarding an investment opportunity is publicly available or is derived from publicly available information. Given the lack of transparency in these markets, among other reasons, the investments on the EquityZen platform do not suit all investor profiles.

Our 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, an investor would also complete a W-9 (W8-BEN for foreign investors) once for our records. 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.

We collect commitments to our investment opportunities based on signed Term Sheets. Our Term Sheet is by nature non-binding. However, we view them as formal commitments to the Fund so we can reserve allocations based on supply. We keep track of all Investors who request and sign Term Sheets. If you do sign a Term Sheet for an investment we will provide a last opt-out date, after which we expect you to commit to the investment.

Termination Fee: You will be subject to a $500 termination fee if you fail to complete the subscription to the Fund following the Last Opt Out Date (defined below) for a reason other than an exercise of the Right of First Refusal by the issuer of the equity interests that are the subject of the Fund's investment.

Last Opt Out Date: We will designate a date (expected to be one day before the transfer notice is submitted to the issuer) after which the Termination Fee will apply. We will provide you with at least four days prior written notice of the Last Opt Out Date.

Please Note: In some cases, where we have significant investor demand we will begin collecting subscriptions prior to the last opt-out date. In this case, your reservation is confirmed by completing the investment subscription documents on or before the last opt-out date. You are still able to withdraw from the deal by not completing your subscription. Should you complete your subscription, your investment would be binding.

Your subscription amount on your term sheet is reflected in a capital ratio, which is the ratio of your capital account balance to the sum of capital account balances of all members of the Fund. In other words, it illustrates the percentage of the total fund that your membership represents.

The aggregate commitments is the total dollar amount committed from all investors in the Fund. It represents the expected size of the fund. As an investor you are a member of the Fund and your investment is represented by your Capital Ratio or percentage ownership of the Fund (your investment size to the entire size of the Fund).

Yes, you will receive Subscription and LLC Agreements indicating your membership in the Fund. You will also receive closing documents from EquityZen outlining the details of your investment.

Your investment in an EquityZen fund would be taxed like any other fund investment. Our LLC 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. The United States tax code allows certain types of entities to utilize pass-through taxation. This effectively shifts the income tax liability from the entity earning the income to those who have a beneficial interest in it. The Schedule K-1 is the form that reports the amounts that are passed through to each party that has an interest in the entity. 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.

Yes. Our third party Fund Administrator will issue K1's annually. EquityZen will also update you on any material impact to your investment (company news, new funding rounds, secondary transactions or indicators to new valuation).

Our stock purchase in each transaction is subject to the company's Right of First Refusal (ROFR), which, if exercised, will prevent the consummation of the Stock Purchase by the Fund. In this case, any transferred investment of yours (held in escrow) would be immediately returned. In short, the Right of First Refusal is the company's right to purchase the shares from the shareholder on the same terms as our offering. The company has up to 30 days to make the decision upon us submitting our Bona Fide Offer via a Transfer Notice (they may also waive their right, in which case we can proceed immediately).

Once we receive full commitments from investors we will stop accepting allocation and will approach the company with our deal terms. The company has a Right of First Refusal which allows them a thirty day (typically) period to purchase the shares on the same terms as our offer. You can typically expect a transaction to close 4-6 weeks from the time we "close" our Fund and stop accepting investor commitments.

By submitting your term sheet you agree to complete the investment process within one week of being informed by email that it is available to be completed. In the event you do not complete it within one week of notification, your investment allocation may be reallocated to another investor and you may be charged a $500 termination fee.

Following an IPO, we can transfer the shares to your brokerage account for you to hold or sell at your preference.

Our sellers 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.

We typically market our offerings for 3 weeks or until an offering is fully allocated. We begin accepting funds at the end of this period. If there is significant demand for the offering we will begin accepting subscriptions immediately and you would have until the last opt-out date to withdraw from the deal or to complete your investment.

By signing a term sheet you agree to complete the investment process within one week of being informed by email that it is available to be completed. In the event you do not complete it within one week of notification, your investment allocation may be reallocated to another investor and you may be charged a $500 termination fee.

When a company goes public, there are some procedural steps and legal requirements that must be followed. Generally, we will seek to unwind the EquityZen fund or series into which you invested (the "Fund") and transfer a number of shares, equivalent to your pro rata ownership in the fund or series, to a brokerage account you designate. The shares held by the Fund are generally subject to two principal types of transfer restrictions. They are subject to a standard IPO lock-up, which means that for a period of 180 days after the IPO, the shares cannot be transferred. The shares held by the Fund are also considered Restricted Securities under the securities laws. Generally, this means, even post-IPO, the shares can't be sold on the open market until they've been held for 1 year. Together with the lock-up, shares held by the Fund can't be sold on the open market until the later of (i) expiry of the lock-up or (ii) one year following purchase. Generally, the company will use a transfer agent, who will hold custody of the pre-IPO shares. After the completion of the IPO, the shares purchased by the Fund will be held with the transfer agent. Once applicable transfer restrictions are satisfied, we will request the transfer agent to remove restrictive legends from the shares and transfer a number of shares, equivalent to your pro rata ownership in the Fund, to a brokerage account of your designation.

We cannot guarantee an exit nor a timeline for any of our offerings. However, the majority of investment opportunities on our platform are companies who have received institutional financing from late-stage or growth funds, who have a typical investment horizon of 2-5 years. Given the relative illiquidity of investments available via the EquityZen platform, they are not suitable for all investor profiles. Please consider your investment time horizon when investing through EquityZen.

First, please remember that by investing through EquityZen, you do not directly purchase shares of a company, but purchase ownership interests in a fund that will own the shares. Shares that are the subject of investment through EquityZen are generally subject to a lock-up period of up to 180 days after the effectiveness of a company's IPO filing, during which time shareholders are restricted from selling their shares. These restrictions are typically put in place by the underwriters to assist in a successful IPO. Note that these shares are also considered Restricted Securities under the securities laws, and must be held for at least one year after acquisition. Thus, shares held by the Fund can't be sold on the open market until the later of (i) expiry of the lock-up or (ii) one year following purchase. Once the lock-up period expires, or one year has passed since purchase, EquityZen will either (i) transfer the shares from the account of the fund to a brokerage account you designate (after which you can do whatever you like with the shares) or (ii) sell the shares in the open market and deliver to you your portion of the proceeds.

While we view the membership interest as a long-term commitment, it is permissible to sell your interest if needed. 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.

If a company on EquityZen that you’ve invested in goes public, we would register the shares and work with your brokerage account’s custodian to transfer the shares. Typically, the common stock available on EquityZen is subject to a 180-day lockup, so we would facilitate this transfer after this period. Since these shares are also Restricted Securities that must be held for at least one year subsequent to acquisition, shares held by an EquityZen Fund cannot be transferred until the later of (i) expiry of the lock-up or (ii) one year following purchase.

If a company on EquityZen that you’ve invested in goes public, we would register the shares and work with your brokerage account’s custodian to transfer the shares. Typically, the common stock available on EquityZen is subject to a 180-day lockup, so we would facilitate this transfer after this period.

The proceeds received by the shareholder (stock and/or cash) would be transferred to the LLC, after which EquityZen (the Managing Member) would distribute these proceeds to the Investor.

A company you invest in may very well raise an additional financing round(s). While your percentage ownership would decrease (as a result of having more shares in the market), the value of your holdings may still increase if the company is raising at an increased valuation.

In short, yes there will be a share price at the time of a liquidity event (either through acquisition or IPO). Should you seek to exit your investment early (before a liquidity event) we cannot guarantee that there will be new information to corroborate a new share price such as a new funding round. For this reason, we cannot guarantee the ability to find you a buyer to exit your investment before a liquidity event.

Investments through EquityZen are structured through fund vehicles. EquityZen has engaged a fund administrator, who has been contracted and paid to administer EquityZen funds, including providing K-1s and making distributions to investors for the life of a given fund. In the event that EquityZen were to become insolvent, we would engage a back-up manager to step into the platform's role as fund manager. The back-up manager would assume EquityZen's role as manager, doing things like coordinating with the administrator. EquityZen has allocated capital to execute this plan.

EquityZen offers private offerings, open to accredited investors only. While some platforms offer non-accredited investors the ability to invest in private offers (under JOBS Act reform of General Solicitation, 506(c)), EquityZen does not.

EquityZen transacts only via company-approved Share Transfers.

Typically, our investors are looking for investments in later stage technology companies with a profile of over $50M in VC funding from top quartile firms, Series C or later, and that are 2-4 years from an exit.

Our minimum transaction size is $150,000. Your shares can be pooled with another shareholder of the same company should your individual holdings not meet the minimum required.

Yes, if the company has a ROFR, the ROFR would need to be waived or the company would need to not exercise its right in order to complete a share transfer.

If we are conducting a share transfer and the company has a Right of First Refusal (ROFR), which is the company's right to purchase the shares from the shareholder on the same terms as our offering, we will work with the company to facilitate the transaction. The company will either decide to waive the ROFR, let it expire, or purchase the shares directly from you on the same terms. Typical ROFR periods are 30 days but it is dependent on the company.

EquityZen only provides liquidity for vested shares.

EquityZen only provides liquidity for vested shares. However, the liquidity can be provided in conjunction with the exercise of vested options.

We’ll send you a short list of documents and information we need to review for our standard diligence. The purpose of our diligence is meant to answer two questions:

1) Do you own your shares? and
2) What needs to happen in order for you to sell your shares to a third party?

Typically, these documents include your Stock Certificate (if your company issues one), a signed Option Exercise Notice, and/or a signed Shareholders Agreement.

We will not ask you for sensitive company information. We will review your ownership documents to (i) verify your ownership and (ii) verify that your participation on our platform does not create any issues in respect of agreements you have in place with the company.

The fee structure is straightforward. A Placement Fee is charged to you in connection with the sale of your shares. To ensure compliance with securities laws, the Placement Fee is paid to EquityZen Securities LLC ("EquityZen Securities"), our SEC-registered affiliated broker-dealer and member of FINRA.

For operational ease, your Placement Fee will be netted from the purchase price for your shares, which is held in an escrow account. This means that at closing, you will receive the purchase price for your shares less any Placement Fee that is due. The Placement Fee will be held in the escrow account, pending closing and satisfaction of other applicable contingencies. The Placement Fee will then be released from escrow to EquityZen Securities.

Where netting of your Placement Fee is not practically feasible, your Placement Fee is required to be paid immediately upon closing of the sale of your shares. The precise mechanics will be disclosed further in the Placement Agreement you sign in connection with the sale of your shares.

Please note that there may be additional costs associated with completing a sale that are not imposed by or paid to EquityZen. Your company may require a legal opinion in connection with a sale, which typically costs $1000-$1500. We can refer you to an attorney who issues these opinions if you need. Your company may also charge you a transfer fee to cover their costs associated with a sale, which typically ranges between $1000-$3000.

We use the last round of financing's pricing as a guidepost. Other factors include investor demand, other secondary transactions that have occurred, publicly available information etc. Please note, as the shareholder you set the ultimate price. If there is a price/valuation you require we can seek that. We will provide you with our analysis of the company's cap table and share price history as well as relative investor interest.

It depends on the company and the provisions it has in place regarding employee stock options. Our deals typically do not require board approval.

We will engage a back-up manager to step into the platform's role as fund manager in the unlikely event EquityZen becomes insolvent. The back-up manager would ensure orderly administration of the fund and distribution of its assets.

Yes. Part of our process is to ensure that each transaction is in accord with all company share transfer policies. Our goal is to facilitate a smooth transaction that is mutually agreeable to all stakeholders including the investor, the selling shareholder, and the company. Notification mitigates the risk that the transaction will not be recognized by the company.

The transaction is viewed as a disposition (sale) of the shares in the year we transact. Outside tax attorneys have vetted our tax treatment and have provided a memo, which is included in the documentation you would receive from us. Let’s use an example. Let’s say you exercise your options at $1 per share and hold the shares for over one year. In 2015, you transact with us at $5 per share, and in 2016 the company goes public at $10 per share. In 2015, you would report the income on the transaction and pay taxes on $4 per share ($5 - $1). You would be taxed at the long-term capital gains rate since you held the shares for at least one year. *Please note that we cannot provide tax advice. Consult your financial or tax advisor for more specific details and confirmation of your situation.

Similar to taxation on any other income, the IRS requires individuals to pay taxes on equity compensation. An 83(b) election is an option implemented by the IRS that allows stock holders to decide (at the start of a vesting period) to pay income taxes on the present value of the equity for the entire amount that will vest. The 83(b) election is valuable if you believe that the value of the company (and subsequently the equity) will continue to rise as you’re pre-paying your tax liability on a lower valuation and then paying long-term capital gains on the increase. If the company’s value decreases however, you’ve prepaid at a higher valuation and overpaid taxes. This is for information purposes only and does not constitute tax advice. Please consult a tax advisor for advice specific to your circumstances.

Investors are Members of a fund (organized as an LLC) that purchases a specific company’s shares. EquityZen acts as the Managing Member of this fund. The assets owned by the fund (and its Members) are shares the fund has purchased from current company shareholders.

No. EquityZen provides liquidity solutions to private company shareholders and does not facilitate fundraising for companies.

Employees’ net worth is increasingly concentrated in company stock, yet their liquidity needs aren’t on the same timeline as that of the company. Employees will have to pay down educational debt, purchase homes, and prepare for life events like the birth of a child. Left unaddressed, employee liquidity issues can adversely impact your company in numerous ways, impacting morale and retention, and lack of control through grey-market brokered transactions.

EquityZen uses an LLC Fund structure and are only one new entrant to the cap table.

Our investors are only given publicly available information to make their investment decision. This includes notable investors, recent funding rounds, total funding, and any notable media or press releases. In order to access deal terms (such as deal size, valuation, share price, and share type), an investor must first be an accredited investor as well as sign an NDA with us. Furthermore, deal information is only sent to investors who have expressed interest in a specific company.

None. Our investors only receive the underlying economics of the shares and do not have access to any information or voting rights. All of these rights stay with the company, only allowing a passive investor economic exposure to the company.

Yes. Our software tool will allow you to nominate shareholders for liquidity. You control who sells, how much, and when.

Yes. Our software tool will allow you to control the total dollar amount as well as the individual percentage of a shareholders stock.

Yes. Our software tool will allow you to choose the start and end dates between which an employee can sell shares.

Our investors are all verified Accredited Investors under a NDA with EquityZen. They include professional angel investors, high net worth individuals, and institutional investors of all sizes. Through EquityZen, your company can get introduced to strategic investors and partners.

Investments are marketed to our Investor base via a newsletter as well as the platform on our website. Unless the company wishes to provide otherwise, only publicly available information is provided to investors.

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