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Investor Newsletter >

Weekly Update #194: Who Owns Private Tech Shares?

EquityZen
Apr 11th, 2017

Who Owns Private Tech Shares?

Investors on EquityZen's platform often ask us who the selling shareholder is. While we do not divulge the seller's exact information, here are some of the more common selling shareholder types:

  • Current Employee: Current employees are issued stock options with a vesting schedule attached. Once those employees hit certain holding periods, they may exercise those stock options, which converts the options into stock. From there, some employees seek to monetize a portion of their shares.
  • Former Employee: A similar case to the current employee, except the shareholder no longer works at the company.
  • Early-Stage Investor: an angel investor, seed investor, or even a Series A venture capital investor that received shares in connection with a primary capital raise.
  • Late-Stage Investor: an institutional investor that may have participated in a capital raise in the past 2-3 years, and seeks to realize any value appreciation in that short time. These include Hedge Funds, Growth Equity Funds, Mutual Funds, Family Offices.
  • Founder of an Acquired Company: A founder of a company that gets acquired by a large pre-IPO technology company may have been compensated in the form of private shares of the acquiring company.
  • Advisors: Directors and advisors that have provided advice and guidance to the company in exchange for equity.
  • Lawyers + Service Providers: In lieu of cash payment, law firms and other service providers may have accepted payment in the form of equity. This is more common at the early stages of a company's life, when the company may not even have any cash to speak of!

 

In other news...

  • For Some Big Law Firms, It's Still All About That IPO Equity (The Recorder)
  • What are Registration Rights? (VC Experts)
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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.

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