Exiting investments: Methods and procedures
While we view your membership interest as a long-term commitment, in most instances, your LLC ownership is transferable after a twelve-month holding period if you own greater than 2% of the fund with the permission of the manager.
If you meet the requirements to be transferable, you can explore an exit using our Express Deals product to create a sell order and list your offering on our platform. To find out whether you are eligible to sell, please visit your Portfolio page and click the "Explore An Exit" button for the investment you would like to exit.
Please note that we cannot guarantee that we will ultimately be able to find a buyer. Because we cannot guarantee a buyer, and because there can be no guarantee of when an IPO or other exit will occur, you should be prepared to hold your investment for an indefinite period.
How long can I hold this investment?
If a company IPOs, we can transfer the shares to your brokerage account for you to hold or sell at your preference.
Not all companies will IPO or be acquired. You should be prepared to hold your investment for an indefinite period.
What happens if a company in which I invested goes public?
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 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 that even post-IPO, the shares can't be sold on the open market until they've been held for one year. Together with the lock-up, shares held by the fund can't be sold on the open market until the later of (i) the expiry of the lock-up or (ii) one-year following the 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 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.
When can I expect the company I’m in investing in to go public or get acquired?
We cannot guarantee an exit nor a timeline for any of our offerings. However, the majority of investment opportunities on our platform are companies that have received institutional financing from late-stage or growth funds that 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.
The company I invested in gets acquired - what happens next?
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.
Is there a share price on the day I decide to sell?
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.