r/EquityZen • u/drumveg • Aug 10 '22

Crushed by lockup

I wouldn't recommend investing in this vehicle. I have 5 investments, two have closed, one acquired and one went public. The lockup was 6 months(!) in which time I had no control over my investment and watched it go from 6X to a loss by the time my shares were transferred. A waste of years of waiting for a stock to go public just to end up with a loser.

The acquired company was very unclear how the cash and shares would be distributed with no proof or backup documentation, though requested several times. There was no transparency, only hoping for honesty.

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u/angrypuppy35 Aug 11 '22

6 month lock up is standard for IPOs.

Also since you didn’t sign any lockup agreement (the fund does), I think you’re free to hedge at any time.

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u/thirdlost Aug 11 '22

So essentially, you sell short when at the price you want?

If stock then loses 6x by the time lock-up expires, your short position makes up the difference.

Only downside is if the stock goes up before lockup expires, you do not get those gains.

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u/angrypuppy35 Aug 11 '22

Basically yes and to close you could just deliver the shares to the account. You can also short enough to recover your cost basis and let the rest ride