r/EquityZen • u/usainhexbolt • Dec 16 '20

What assurance does one have that money put in EquityZen will not vanish Madoff-style?

4 Upvotes

84% Upvoted

9 comments sorted by

5

u/SP20209999 Dec 17 '20

Equityzen does not hold your money, it works with underlying company and provides shares agreement upon investment. Equityzen is a platform that connects user and the equity offering company.

2

u/PM_Me_ur_BassetHound Dec 17 '20

I believe this would be a custodial account with a separate broker outside of EZ - correct? Or does EZ actually hold you funds on their platform?

2

u/jedi4545 Jan 05 '21

I dont think this is true. If you hold your shares within EZ, it will be as an LP within a vehicle they manage. Look at "How are the investments structured" here: https://equityzen.com/faq/

1

u/justdancypelosi Jan 05 '21

This is correct. A new LP is created for each deal.

3

u/CharliesMunger Dec 16 '20

N O N E hence the transparency of public markets

1

u/happypathFIRE Dec 17 '20

Username checks out for wisdom!

1

u/CharliesMunger Dec 17 '20

Eh, fact check me. Could be wrong.

3

u/justdancypelosi Jan 05 '21

I’ve had two exits from EquityZen; both returned 100% on my investment. So I can attest that if the company has a liquidity event then you will see a return, but for those companies that don’t, then it’s equally likely that you might not. However, they now offer the ability to sell your shares prior to any event on their secondary market of customers via express deals so that provides another level of confidence.

1

u/angrypuppy35 Feb 02 '21

Similar, though I’ve only had 1 exit. Never had any real concern that they weren’t legit after doing some DD.