Going Private

Nearly my entire investing career has been focused on the public markets. I work for a private employee-owned company but I’ve never invested in any private companies outside of my own. Recently, I started to become more interested in tech startups and private markets—mostly because of the hot IPO market in the last two years. I wanted to get involved early and see a different side of investing. I also wanted to diversify across different markets to generate alpha.

I have a friend who runs a startup incubator and have went to their quarterly demo pitches. I’ve always been interested in hearing the different verticals companies are working on. Running the Ramp Twitter account and website has also grown my entrepreneurial spirit and started pushing me towards the private markets.

As I was doing research into the private sector, I came across a company called EquityZen. They’ve been featured in the New York Times, Wall Street Journal, and CNBC as well. I set up a phone call with their head of marketing to discuss their company and mission. As stated on their website,

EquityZen’s mission is to improve the way startup employees are paid by unlocking the value of their equity compensation in a way that benefits all key players: the shareholder, the company, and the investor. Employees should have the opportunity to share in the value they create for their company's shareholders. This must be accomplished in a manner that keeps the focus on company growth, the number one priority for all stakeholders. Investors that previously couldn't access late-stage private companies due to investment minimums, can now benefit from increases in the value of private growth companies.

I recently signed up with EquityZen—you have to fill out some information before you can see the live offerings. The cool thing about this company is you can get access to a slew of different private companies before they go public—names like Spotify, Docusign, and a host of other unicorns you’ve most likely heard of or products you’ve used before.

To view the private investment opportunities, you have to be an accredited investor, per SEC definition. You can read more about what it takes to be an accredited investor here. The main reason you have to be an accredited investor is to protect the little guy. Private listings aren’t required to provide the granularity of their financial situation like public companies are—per SEC rules.

When you make an investment on EquityZen, you are purchasing ownership in an EquityZen fund that owns the shares of the company. You will not own the stock in the company directly.

During one of the calls with EquityZen’s marketing team we discussed ways we could offer deals to any of my followers that are interested in joining the private investing world with me. Typically, their minimum investment in a single fund or company is $20,000. Any of my followers who want to invest can do so at a $10,000 minimum for their first investment if you sign up through this link.

Full disclosure: I haven’t purchased any of the private listings yet. I will have to do a ton of research first, just as I would with any publicly listed stock when real money is at risk—you should do the same. I will also lean on my own advisors to help guide me through this process.

In general, I’d say I’m somewhat conservative—with life, investing, etc. So, if you are like me and a little bit more risk averse and more prone to diversification, EquityZen occasionally offers a diversified fund that spreads your investment across 15-20 different companies. They offer one new fund per year and the window for the current fund is days away from closing. This is a cool feature if you didn’t want to put $10,000 into a single private company. Obviously this will reduce some of the volatility but could be a better option if you weren’t willing to throw 10 racks on a single company name.

If you work at one of the private companies featured on EquityZen I would love to hear you pitch your product and persuade me to invest. Also, if you have any specific questions about EquityZen I can put you in touch with their head of marketing.

Email me at timestamp@330ramp.com.

I was paid to write this by EquityZen Securities LLC, member FINRA\SIPC. The views expressed are my own and not those of EquityZen. My experience might not be representative of those of other EquityZen customers, and past performance does not guarantee future success.