Getting Started

Who can Invest?

Accredited investors who meet suitability and compliance standards are eligible to invest.

As of June 2017, the current requirements for individual accreditation are:

A) $200,000 Gross Annual Income ($300,000 if married), or

B) $1,000,000 in net worth minus the value of your principal place of residence

Please be aware that the SEC may change the accreditation requirements in the future and thus should be verified at this link, prior to investing.

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I am located abroad (or my entity is located abroad); can I invest?

Certainly; as long as the required compliance checks are completed (accreditation, background and ID checks for regulation, Anti-Money Laundering and Office of Foreign Assets Control list, etc.), from a U.S. perspective, you are eligible to invest. These are required for all customers, whether domestic or international.

Additionally, the fund has been structurally established in a manner that is particularly attractive to an international investors. We have established a Cayman Master fund with a Cayman-based feeder fund for U.S. Tax-exempt investors and a Delaware feeder fund for U.S. non-tax exempt investors.

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What are the legal and compliance aspects of this?

EQUIAM's outside counsel is Tannenbaum Helpern Syracuse & Hirschtritt LLP for U.S. matters and Ogier for Cayman matters. EQUIAM's fund administrator, MaplesFS, is a global organization with a proven track record of providing premier fund administrative services. EQUIAM funds are audited by KPMG on an annual basis.

Please note that we do not provide legal counsel to investors. All parties are responsible for making sure they understand the benefits and risks of this asset class and any associated transaction.

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Can I invest through an IRA / special purpose vehicle / other entity?

Yes; we just would need additional documentation to prove your ownership or authority to transact on behalf of such a vehicle. Again, standard compliance requirements.

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Why should I consider an EQUIAM investment?

Why should I consider this asset class?

Diversification and exposure.

The private tech market is quickly becoming a meaningful portion of the suite of asset classes available in today’s financial markets. Assuming you already have a sufficiently diversified portfolio across a range of safe and moderately safe securities, it is certainly worth considering for inclusion in a balanced portfolio.

Of course, each investor's situation is different, and suitability is a case-by-case conversation. But for many accredited investors, later-stage private market investments can certainly offer compelling investment opportunities while the companies are in the rapid value creation phase.

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I am an accredited investor or family office. Why is EQUIAM a good fit?

In public and liquid markets, strategic advantages and inefficiencies have been squeezed out through greater automation, high-frequency trading, and increasing correlation between asset classes.

However, there is still opportunity available for private technology investors.

Currently, this asset class is only available to very large institutional investors (hedge funds, private equity firms, venture capital funds).  We’re bringing access to accredited investors, family offices, and boutique investment firms. We’re putting the control and access back in the hands of the check-writers, at a variety of sizes.

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I run a long-term, conservative fund, such as an endowment, pension fund or sovereign wealth fund. Why is EQUIAM a good fit?

For a sufficiently large pool of capital, exposure to as many asset classes as possible is crucial. As one of our advisors reminds us, diversification is the most conservative strategy of all. This is especially true when that asset class is uncorrelated to the rest of your portfolio.

Private technology investments are compelling because:

• Diversification amongst conventional asset classes is rapidly rising; equity markets, commodities, corporate debt, are all moving in lockstep

• Private tech companies are growing rapidly by disrupting massive addressable markets (while traditional industries have stagnated)

• Their eccentric growth produces compelling returns that are frequently orthogonal to conventional assets

                                       

Source: Charles Schwab Investment Advisory, Inc., with data from Morningstar Direct.

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I am an accredited investor, but I don’t really understand the startup or tech market. Why is EQUIAM a good fit?

EQUIAM provides diversified access to the private technology asset class. This diversification minimizes risk compared to single company stock picking, yet due to the nature of private investments, this asset class is intended for investors who pass the accredited investor threshold. We ensure each investor passes suitability requirements for an investment before closing, and we may decline to complete the transaction if it does not seem appropriate for that investor’s situation (income, net worth, or other circumstance).

If you are a potential investor, it’s important to understand the key characteristics and risks of private market investments before deciding to move forward with even a small allocation, including:

• They are illiquid investments, and your capital may be locked up for long periods of time

• They are risky investments and you may lose some or all of your principal

• There is often little information available to potential investors since access is limited by companies

• There may be legal, regulatory, and tax risks associated with each investment

We strongly recommend consulting with your financial advisor, legal counsel, tax accountant, or others when considering an investment. If you’re still not sure at the end, it is likely that EQUIAM is not a good fit for you.

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Fund II Specific FAQs

Does the fund intend to avoid firms like WeWork & Uber?

Yes. We have created a number of data-driven proprietary assessment metrics that allow us to eliminate companies that do not meet the minimum threshold for investment. While we can't describe our exact proprietary methods, we look at a variety of factors including total capital raised in comparison to total FMV and eliminate firms that are deemed to have unfavorable capitalization.

From a historical perspective, our proprietary filters would have successfully excluded a number of firms (e.g., WeWork, Uber, Lyft, Magic Leap, and SoFi). We will never invest in a firm that is simply using venture capital to subsidize its unprofitable/unviable business. The public markets have punished firms that fit this mold and we have the data and insight to avoid these investments.

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How does the private market perform during economic downturns?

We performed rigorous analyses on private company performance during the most recent financial crisis (2007 - 2009). 

We assessed all late-stage private technology companies that (1) raised a Series C+ round between January 1st, 2004 and December 31st, 2006 (pre-crisis) and then (2) exited via M&A, IPO, or Bankruptcy between January 1st, 2008 and December 31st, 2012. Ultimately, 89 private tech companies met the above criteria. 

If you were to have invested equally across all 89 companies on December 31st, 2006 at the valuation of their most recent funding round and held those positions through their ultimate private market exit, you would have realized an IRR of 20%. In comparison, the S&P500 generated an IRR of 0.1% over the same time period.

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How can EQUIAM be confident that it will be able to source the fund's targeted components?

EQUIAM successfully deployed into 30 targeted positions over a 6.5 month time horizon following their Q1 2019 initial closing of their flagship, EQUIAM Private Tech30 Fund I. EQUIAM has proven their capability to deploy in a rapid and effective manner.

On a forward-looking basis, EQUIAM has strategically partnered with Forge a leading private secondary marketplace that has brokered $2Bn+ in historical secondary transaction volumes. Forge has facilitated transactions within the past 12 months in the vast majority of the Fund II targeted components and has open offers for several of the remaining. EQUIAM will work closely with Forge to source the remaining, untapped supply. 

In addition, EQUIAM will work frequently with other platform based broker-dealers, lone-wolf brokers, and directly with the issuers. Total direct secondary annual trading volumes are estimated to be well in excess of $50Bn with a significant percentage of that volume concentrated in the top 30 - 60 companies. With a mere $100M mandate, EQUIAM will be investing no more than $2.5M - $5M into a single issuer. Since every targeted company has a secondary valuation in excess of $500 Million, the average percentage investment in these companies will range from ~0.01% (low-end) to ~0.5% (high-end). In any scenario, these are tiny fractions of these organizations; hence supply can be efficiently sourced from traditional sources (i.e. Venture, PE, Angel investors) as well as a blend of early and rank & file employees.

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Are there any liquidity provisions? Will I be able to exit the fund prior to the scheduled fund termination?

The fund is a closed-end fund with an established 4-year fund life (plus two potential 1-year extensions should market conditions dictate such a decision). Hence, we expect our investors to remain invested in the fund for the duration of that period. In comparison to the standard 8 to 10-year fund lives of most venture and PE funds, we feel our time frame is quite reasonable.

With that said, we are acutely aware of the importance of liquidity. As a result, we have structurally designed the fund to self-liquidate over the duration of the fund life. 

During the first eighteen (18) months following the final closing (planned for Q2 2020), the fund intends to reinvest all received proceeds from exits back into the fund. Following the expiration of the reinvestment period and for the remaining life of the fund, all exit proceeds will be delivered pro-rata to the investors in the fund, analogous to a dividend.

The primary ways a company will exit the fund will be via (1) IPO and (2) Acquisition.

Finally, we will allow for LPs to seek a sale of their stake via secondary brokerage platforms, such as Forge, but these sales are subject to normal market conditions and we cannot guarantee there will be willing buyers in the market.

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How will the quarterly rebalancing process be executed?

The rebalancing process is guided by a framework, but it must be properly described as discretionary. The rebalancing framework guides which companies are to be brought before the investment committee for divestment/investment determination.

The framework is as follows: 

1) On a quarterly basis we will compare the actual components in the Private Tech30 Fund II versus the Enhanced Private Tech30 Index (EPT30), should one of the current fund components have "dropped out" of the index, we will place that component on notice for the following quarter's rebalancing assessment. If in the subsequent quarter rebalancing assessment, the on notice component has remained outside of the index, it will be brought before the Investment committee for careful scrutiny as a divestment candidate. The review will include a market sentiment assessment, conversations with market operators/broker-dealers, fundamental analysis if financials are available, and, if possible, potential strategic discussions with issuer representatives to determine the long-term viability of the position.

If the component is chosen to be divested, it will be sold in a prompt manner, but of course only at a fair market price and only if there are willing buyers in the market. Assuming the component is successfully, and fully, divested, those proceeds will be invested into the new component that has "jumped" into the index that initially caused the "dropped" component to fall.

2) Due to transactional costs, we will do our best to avoid liquidating (1) partial positions and (2) any positions that have been held for <12 months to avoid short-term taxable gains. However, if a component increases in value to a point that it then comprises 15%+ of the total fund value. We will bring that component under careful review during our quarterly rebalancing assessment and determine whether a partial divestment would be suitable. In most cases, our management team, in conjunction with the investment committee, would advise a 50% divestment. The proceeds of such divestment will be used to bring the remainder of the fund into as close of balance with the current EPT30 percentage allocations.

Finally, it is critical to note the self-liquidating nature of the fund. After the reinvestment period ends (i.e., 18 months after the final closing), when components (1) go public, (2) get acquired, or (3) enter forced liquidation (i.e., bankruptcy) -- the number of components in the fund will decrease in number. (i.e. 30 -> 29 -> 28 -> 27, and so on and so forth.)

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Will there be a tracking error?

Yes, there is a likelihood of a small initial tracking error due to the following two scenarios:

(1) The fund will never initially invest in a public company; whereas, the index will, for short periods of time, include publicly traded companies. This is due to the common lock-up provision that prevents pre-IPO equity holders from selling their shares in the public markets until ~180 days following IPO. Hence, during the initial fund investment efforts, if public companies are present in the EQUIAM Enhanced Private Tech30 Index (EPT30)they will not be pursued for investment purposes by the EQUIAM Private Tech30 Fund II, instead, the fund will replace the publicly-traded Index component with the next highest-ranked private company. 

(2) If the Index includes a private company that has severely onerous transfer restrictions and after substantial effort, it is deemed unlikely that an investment will be possible, the fund will, again, move on to the next highest-ranked private company in the universe of considered companies. The EQUIAM Private Tech30 Fund II Private Placement Memorandum (PPM) stipulates that the fund is eligible to invest in 30 of the top 40 private companies that meet the index inclusion criteria.

Additionally, as the fund matures, the tracking error will undoubtedly fluctuate. It is unreasonable from both a cost and operational perspective to rebalance the fund any more frequently than on a quarterly basis. 

Those rebalancings will be subject to certain, unavoidable risks such as lack of demand for "losing" positions and extreme supply constraints when attempting to purchase "winners". Additionally, some companies may grow far more rapidly than anticipated, as such that a component significantly breaches the 15% threshold at the midpoint of a quarter. In these cases, we will not pursue an "emergency" rebalancing process, but rather wait until the scheduled quarterly rebalancing review. 

Next, the fund will be self-liquidating over time as the initial components go public or are acquired. Naturally, this will create a tracking error in comparison to the thirty (30) component EPT30. However, the fund will seek, via its quarterly rebalancing periods, to remain closely in line with the first several components of the index. For instance, if the EQUIAM Private Tech30 Fund II has 20 components at a specific point in time, all rebalancing efforts will be guided by the first 20 components of the EPT30.

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How can the fund life be so short (only 4 years)?

The average age of venture-backed companies at IPO since 2001 is 11.6 years. The average age of companies in our fund is 8.6 years old. Naturally, within 4 years we will have eclipsed, on an average basis, the typical IPO age (11.6 years) of venture-backed companies. 

Additionally, to be particularly risk conscious, we have allowed for a potential 2-year extension (in 1-year increments) providing additional runway for company exits should there be market uncertainty or other macroeconomic concerns that would encourage a lengthening of the fund life. 

Any remaining companies in the fund at the end of that 6-year window will be liquidated via the secondary markets.

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Will the fund hold public securities?

Yes, at times. Initially, all components will be private companies. However, immediately following a public offering, we will be bound by the standard lock-up provision, hence for around ~180 days, we will be holding public securities. We will plan to fully liquidate the public position, guided by the Investment Committee, within 1 quarter of the lock-up expiration. We will also allow for LPs to receive their proceeds, in kind, via share delivery should they wish to remain equity holders of a specific company.

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Private investments are not appropriate for all investors. This asset class involves a high degree of risk, volatility and illiquidity, beyond that associated with traditional asset classes. Investors should consider private investments a supplement, comprising a modest portion of an overall investment strategy. Investors are solely responsible for are advised before making an investment decision with respect to the Tech30 Fund to review carefully the respective offering documents (including any relevant underlying agreements), and the related subscription documents regarding the Tech30 Fund and are responsible for performing such due diligence as deemed appropriate, including consulting their own legal, tax, ERISA, and financial advisers. Any information provided by EQUIAM and its affiliates should not form the primary basis of the investment decision. This material is based upon information EQUIAM believes is reliable. However, EQUIAM does not represent or warrant that it is accurate, complete, and/or up-to-date. EQUIAM does not accept any responsibility to update any opinion, analyses or other information contained in the material. This material is for your general information only and solely to assist you in deciding whether to proceed with a further investigation of the Tech30 Fund. It is not an offer or solicitation to buy or sell any security, which can be made only through the delivery of formal offering document(s) which include, among others, a confidential offering memorandum, limited partnership agreement, subscription agreement, and related subscription documents. Such formal offering documents contain additional information not set forth herein, including information regarding certain risks of investing, which such additional information is material to any decision to invest in the Tech30 Fund. The information contained herein is based on certain assumptions, hypotheses, estimates, and anticipated outcomes which may or may not be true. This website contains forward-looking statements, including observations about markets and industry and regulatory trends as of the publication date of this website. Forward-looking statements may be identified by, among other things, the use of words such as “expects,” “anticipates,” “believes,” or “estimates,” or the negatives of these terms, and similar expressions. Forward-looking statements reflect EQUIAM’s views as of such date with respect to possible future events. Actual results could differ materially from those in the forward-looking statements as a result of factors beyond EQUIAM’s control. Investors are cautioned not to place undue reliance on such statements. No party has an obligation to update any of the forward-looking statements in this website. Charts, tables and graphs contained in this website are not intended to be used to assist the reader in determining which securities to buy or sell or when to buy or sell securities. Return targets or objectives, if any, are used for measurement or comparison purposes and only as a guideline for prospective investors to evaluate a particular investment program’s investment strategies and accompanying information. Targeted returns reflect subjective determinations by the Investment Manager based on a variety of factors, including, among others, internal modeling, investment strategy, prior performance of similar products (if any), volatility measures, risk tolerance and market conditions. Performance may fluctuate, especially over short periods. Targeted returns should be evaluated over the time period indicated and not over shorter periods. Targeted returns are not intended to be actual performance and should not be relied upon as an indication of actual or future performance. In this website, performance results are shown net of all fees and expenses (such as transaction costs, management, performance, administrative and any other fees and expenses applicable to the Fund) and may reflect the reinvestment of dividends and other earnings. Statements made herein that are not attributed to a third party source reflect the views and opinions of EQUIAM. No representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. The past performance of EQUIAM, its principals, partners, or employees, or any of the securities referred to herein is not indicative of future returns. The performance reflected herein with respect to the Enhanced Private Tech30 Index and the performance for the Tech30 Fund and any given investor may differ due to various factors including, without limitation, the timing of subscriptions as well as changes in market conditions. Investment returns will fluctuate and may be volatile, especially over short time horizons. The Tech30 Fund’s investment strategy involves investments for which no public market exists. Little public information exists about many of these investments, and the Tech30 Fund will be required to rely on its diligence efforts to obtain adequate information to evaluate the potential risks and returns involved in these investments. Therefore, the greater risk that the Tech30 Fund may invest on the basis of incomplete or inaccurate information may adversely affect the Tech30 Fund’s investment performance, which could impact both initial and ultimate valuations. This could subject the Tech30 Fund to greater risk than investments in established publicly-traded companies or businesses and negatively affect the Tech30 Fund’s investment returns. There is no assurance that the Tech30 Fund’s diligence efforts will result in an investment being successful. There is no guarantee that EQUIAM will be successful in achieving the Fund’s investment objectives. An investment in the Tech30 Fund contains risks, including the risk of complete loss. The performance reflected herein is estimated, is based on incomplete information and is subject to change. Actual results, when available, may differ. While the indices presented herein are not perfect measures of performance, they have the advantages of being relatively well known and reflect with reasonable accuracy the experience investors have with financial markets. Given the nature and number of securities comprising these indices, the Tech30 Fund should be considered a more volatile and risky investment. There is no guaranty that at any time the securities held by the Tech30 Fund will be securities that comprise all or part of any of these indices. Furthermore, indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. The returns for the Tech30 Fund have not yet been audited and may change as a result of audit. Any financial benchmarks or indices shown are unmanaged, assume reinvestment of income and do not reflect the impact of any management or performance fees. The instruments traded by the Tech30 Fund are not limited to the instruments comprising any index. There are limitations in using financial indices for comparison purposes for the foregoing and because such indices may have different volatility, diversification, credit and other material characteristics (such as number or type of instrument or security). Any trademarks or business names in this website are included solely for informational purposes and, in certain cases, as examples of companies in the asset class in which the Tech30 Fund may invest, and any such trademarks and business names are owned by their respective trademark owners. While the companies represented by such trademarks and business names may be invested in by the Tech30 Fund, there is no guarantee that such companies will be invested in by the Tech30 Fund.