Express Deals

An overview of Express Deals on EquityZen

Updated over a week ago

Exploring express deals on EquityZen

An Express Deal is a single company fund offering in which the seller in the deal acquired their position by investing in an EquityZen fund. In other words, someone who invested through our platform is now selling the fund interest they purchased.

Express Deals are called “express” because they can close in as little as 3 days! This is because these transactions do not require third-party approvals to close.

Here’s an example to help illustrate: In 2020, Jane invests in Company A at $10 per share via a Standard Deal on the EquityZen platform. In 2022, Jane needs liquidity. With Express Deals, Jane can create a sell order for her position in Company A, list the order on EquityZen for investors to see, and get the cash she needs all within a week!

Please note there is no guarantee that any fund investment will be eligible for an Express Deal in the future. Likewise, there can be no guarantee that a buyer can be found.

Express deal fees

EquityZen charges sellers a 5% fee when the transaction closes. The Placement Fee is paid to EquityZen Securities LLC ("EquityZen Securities"), our SEC-registered affiliated broker-dealer and member of FINRA.

Can I list my Express Deals sell order for more or less than the suggested price range?

Yes, the suggested price range tool is simply meant to serve as a guideline when creating a sell order. Our team compiles the range using data from recent funding rounds, active sell orders on our platform, and additional company news. While the range is used to give sellers a rough estimate of the likelihood that their order will clear at a given price, the price that the seller ultimately chooses to list their order at is entirely at their own discretion.

What does Market Demand mean when I am creating a sell order for an Express Deal?

The Market Demand graph serves as a data point for potential sellers to view the total amount of indications of interest by EquityZen investors in a given company. In other words, Market Demand shows investor sentiment rather than explicit open buy orders.

One way a potential seller might utilize this data point is that Jane wants to sell her position in Company A, which she invested in through an EquityZen fund. She wants to sell at $10.00 per share. The Market Demand metric shows that there is $200,000 worth of investor interest in Company A. Therefore, Jane might aim to sell up to 20,000 units rather than 40,000, given the known investor interest in this company.

Why can I sell more of my shares in one particular company versus another?

In order to sell your holdings via an Express Deal, you need to hold more than 2% of the initial fund (in addition to holding the position for at least a year). Additionally, the size of your sale must also clear the greater than 2% threshold. As more than 2% of a given fund differs from fund to fund, the number of shares you will need to hold/sell to hit this requirement for sale will differ depending on the size of the given fund and your initial investment. Please note, in some instances, the fund size may change.

Why is the limit 2% to sell shares as Express Deals?

To be eligible to sell your EquityZen fund holdings in an Express Deal, among other things, you need to hold more than 2% of the initial fund (in addition to holding the position for at least a year for an initial fund purchase, or at least 6 months if purchased in an Express Deal). If you do not meet the greater than 2% threshold, then you cannot exit your LLC ownership via an Express Deal. This restriction exists to protect all members of the fund from adverse tax consequences.

Unfortunately, this is not flexible as it is aligned with regulatory requirements.

Where can I find information about the 2% limit to sell shares via an Express Deal?

These limitations are found in the subscription agreements all members sign when acquiring an interest in the fund. Specifically, Section 6(f) of the subscription agreements contains the following investor representation:

“You are aware that an investment in the Series is highly speculative and subject to substantial risks, some of which are set forth on Exhibit B hereto. You have read and understand such risks in their entirety and agree that these risks, and other applicable risks, may adversely affect your investment in the Series. You have adequate means of providing for your current needs and possible contingencies, and are able to bear the high degree of economic risk of this investment, including, without limitation, the complete loss of your entire investment in the Series, the lack of a public market, and the limited transferability of the Interest, which may make the liquidation of this investment impossible for the indefinite future.”

Unfortunately, this is not flexible as it is aligned with regulatory requirements.

What happens after I create my sell order?

If you received a suggested price range and the likelihood of sale when creating your sell order, and you have gone through the transaction flow and clicked submit, then your sell order will be posted within 24 hours to the given company page for EquityZen investors to purchase.

However, if you weren’t presented with either of those functions, it means we are still working on creating a price range for the company. Once we have this completed, you will receive a follow-up email from us asking to reconfirm your sell order. Then, once you complete this process, your sell order will be posted to the given company page.

Can I modify and/or cancel my sell order once it has been posted?

Yes, you can modify or cancel your sell order at any time until an investor has completed the necessary paperwork to officially claim your offering. At that point, you will no longer be able to make changes to your sell order. Please note that your sell order is considered binding—akin to a “good-til-cancel” order—if actively posted on our platform.

To modify or cancel your sell order, visit your Portfolio page and click the Modify Sell Order button for the corresponding offering.

My sell order has been live on your platform for weeks. How come my sell order hasn’t been filled yet?

Ultimately, it is up to our investors to decide whether they want to buy at the price you have chosen for your sell order. That said, there are a few best practices to increase the chance of a match:

  1. Choose a price around our Suggested Price.
    The majority of successful deals on our platform happen at a price point that is a ~20% discount to the last funding round. The Suggested Price will take this into account, as well as leverage the prices of active sell orders on the platform.

  2. Keep order sizes between $20,000 and $50,000.
    Our Express Deals are a match between one buyer and one seller. Therefore, one buyer will be required to purchase the full size of your order in order for a match to occur. The pool of investors who will take an order of $50,000 is larger than that of $500,000.

  3. Stay active!
    Keep an eye on your sell order by following along via our Investments page. You can visit the company page for the company in which you are selling and see what prices other users are asking for. With this information, you can update your sell order to be more competitive by clicking the Modify Sell Order in your Portfolio.

I tried to invest in an Express Deal but I was kicked out. What happened?

Think of this like buying tickets on StubHub. When you select an Express Deal to invest in, we reserve that deal for you and you alone, including hiding the deal so no other investors can see it. You then have a defined period of time (shown in a timer at the top of the transaction process) during which you must complete and submit your transaction. If you do not complete the necessary steps in time, you will be removed from the deal and the deal will be placed back onto our platform for other investors to access. It’s all in the name: Express.

Is there a minimum amount of time I must hold my investment before I am able to sell through an Express Deal?

Yes, you must hold an eligible investment for not less than one year before you can utilize Express Deals. If you invested through an Express Deal, your minimum holding period is six months.

Why am I unable to adjust my investment size for an Express Deal?

The reason you are unable to adjust the investment size for an Express Deal is because the investor in an Express Deal must purchase the whole investment size. With Express Deals, the seller creates a sell order by choosing their desired price per share and number of shares. The buyer must take the whole order to move forward. This can lead to substantially lower or higher investment sizes for investors who are used to seeing the flat $20K minimums on our Standard Deals.

I created a sell order through the Express Deals feature. Will I need to pay a placement fee even if my order is not filled?

No, you will only pay a placement fee should your order be executed successfully. We will automatically remove the fee when sending the funds to your bank account.

I previously invested in Company X via an Express Deal. Am I able to sell my position? If so, how long must I hold my investment before I am able to do so?

Yes, as long as the fund remains eligible for Express Deals, you are able to resell a position you acquired via an Express Deal. If you invested in an Express Deal, you can generally resell your position at least 6 months after your purchase closed.

When investing in an Express Deal, how long do I have to fund my investment?

Investors have 3 days to fund their Express Deals investment from the moment they submit their transaction. Your investment deadline can always be found on your Portfolio page. Simply click on the ongoing deal and you will see a timer counting down at the top of the page.

You must fund your investment via a wire or ACH push payment. Failing to send funds by the investment deadline will result in removal from the deal. At that point, the offering will be placed back on our platform for other investors to take.

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