Accredited investors who meet suitability and compliance standards are eligible to invest.
As of October 2019, 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 excluding 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.
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.
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.
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.
Fund II Specific FAQs
We believe our edge comes from our unique position in the market and our systematic, top-down approach. Our partnership with Forge allows for exceptional execution, and our data-sharing agreement allows for day-to-day monitoring of value across the private universe that was previously impossible. We combine this information with signals constructed using a propriety dataset on company revenue, headcount, valuation, and public market competitors, among other inputs, to create rigorously tested signals for predicting company performance. This systematic process removes the human element from our strategy, with cold calculation replacing rumor and sentiment. While this may mean we sell names a bit early, it limits our exposure to potential bubbles and blow-ups, meaning we will preserve client capital and can capture deals in a downturn.
Another important component of our edge is our ability to improve through time. We firmly believe that investment managers should come to work each day and assume that the rest of the market is working to erode their edge. By using a systematic process, however, we believe we can improve faster than the competition by compounding our understanding. Our improvements aren’t point-in-time or limited to one of our investor's brains—when we have an investment insight, it is systemized and added to our overall process and knowledge bank. This frees us to go tackle the next big investment question rather than continually wrestling with the same issues. Over time, the benefit of compounding (much like in investing) should increase the distance between us and our peers.
EQUIAM successfully deployed into 30 targeted positions over a 6.5 month time horizon following their Q1 2019 launch 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.
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 twenty-four (24) months following the final closing (planned for Q4 2020), the fund intends to reinvest all exit proceeds 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, (2) Acquisition, or (3) a systematically triggered exit via the private secondary market.
Lastly, 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.
Yes, at times. Initially, all components will be private companies. However, if we choose to hold a position through IPO, 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 6 - 12 months following lock-up expiration.