The best results are by those that can diversify and are successful in selection. Startup investing is a numbers game with the minority of investors able to obtain high rewards while many others fizzle. Most provide no expectation of dividends, payments, or cash flow with the potential to lose all of their value. As of June 2020, returns for the 250 companies offered so far have ranged between a 100% loss and a positive 450%. EquityZen Review of Risks and ProtectionsĮquityZen’s companies are high-risk/reward private companies. That way you can feel comfortable when you’re trading real money. If you’re worried about the fee’s then keep practicing instead of using real money. That doesn’t mean to buy larger blocks, however. If your sales are larger, you could get a break on the charge of the fee. They charge sellers a 5% fee when they close out their transactions. After this fee, there are no carried interest or AUM fees.ĮquityZen also offers curated funds that provide investment in 4-25 pre-IPO companies with the purchase of a single asset– claiming historical fund returns of 15 to 25% for a $20,000 minimum investment in these funds. For each investment, there is a one-time fee ranging from 3-5% in addition to the amount of investment (like a transaction fee) paid to EquityZen. For the duration of the SPE-LLC, investors receive an annual K-1 tax statement. Investors receive the actual company shares into their brokerage accounts if/when the IPO happens and after the lockup period. The seller is providing stock to EquityZen, and a Special-Purpose Entity (SPE) LLC is created to hold the stock.ĮquityZen’s investors purchase a membership interest in the SPE LLC. These assets are made available to EquityZen clients with a legal and financial trick. Included in the assets are established tech companies with known brands. They also have preview investments that allow investors to express their interest and likely to gain shareholder’s and company’s confidence for investment. Currently, EquityZen has 16 assets available, with others on a waitlist. Only accredited Investors can view the list of EquityZen’s offerings and review any previous rounds’ financing data, share price performance, and other company information.Īvailability of these investments relies on sellers of private shares and the company’s approval.
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