EquityZen is a prime New York based brokerage company which is becoming an innovative name in the group of online investment platforms as an alternative to the usual stock exchanges. This brokerage is well known for allowing their customers or clients to invest in privately held companies in America. These companies enable the Brokerage EquityZen late point, but pre-IPO assured investments with a considerably high potential. However, to invest via EquityZen, you must meet the criteria of being an accredited investor. To discuss more about this brokerage firm, its criteria, and its legitimacy, we have written this detailed EquityZen review to share our unbiased and weighted opinion.

What Type of Company is EquityZen?

EquityZen is known as a web-based investment company and brokerage that was established in 2013x. This brokerage is New York-based, where everyone talks businesses and is looking for profitable yet convenient ways of making investments. EquityZen provides investment opportunities in the private market where you can submit pre-IPO investments.

EquityZen believes in earning on the basis of selling stocks or shares of private companies. These shares are known as pre-IPO, and it is beneficial for those who buy and hold the shares while waiting for big investors to inject significant investments into these private companies.

The minimum limit for investing or buying shares via the EquityZen brokerage is $10,000. This limitation means that one must be an accredited investor with at least $10,000 of deposit. Moreover, investors looking to make pre-IPO investments must understand that their funding will be withheld for at least two and max five years.

Is EquityZen a Legitimate Brokerage Company?

Yes, EquityZen is entirely legitimate, and they are New York based with their own online platform. But unfortunately, you cannot trade with them via the stock market since they deal with selling shares of private companies. EquityZen can be considered as the alternative brokerage to invest in companies that are not yet available for trading on the stock market.

Keep in mind that a company that has not achieved pre-IPO status is not always a safe or proper area to invest in. Hence, if you are a new investor in the sales and stock markets area, we suggest waiting until the company goes live on the stock market.

How Can You Invest with EquityZen?

EquityZen has an online platform allows retail investors to search for pre-IPO approved companies for investment. The investment opportunities in these companies are usually available to insiders of the companies or employees only. However, these investments are openly available to everyone who meets the criteria.

EquityZen brokerage buys shares from private companies, who submit a 5% fee upon receiving cash. Even though these shares are not publicly traded, the EquityZen brokerage resells shares to their retail investors.

How to Invest in Pre-IPO Companies?

Pre-IPO companies at EquityZen are basically the startups looking for a bump to make their mark in the stock market. Now, if you are willing to invest in these pre-IPO companies, its recommended to meet the eligibility criteria for your participation. This eligibility criteria are defined by the SEC (Security and Exchange Commission) of the United States for all national and international investors to meet the following factors.

• You must have earned over $200,000 in each of the two prior years you will be expected to earn the same amount this year.
• During previous two years, the collective income of you and your spouse should be around $300,000 and the same amount of income is expected to be earned this year as well.
• You and your spouse collectively should have a net worth in total of $1 million, exclusive of the primary residence value that you own.

How Much EquityZen Charge on Investment?

According to the reviews on Trustpilot and other platforms, EquityZen charges around 5% as a fee upon closing the transactions. If the sales are more significant, the 5% charge will be waived or reduced than the 5% charge. EquityZen takes a portion of your investment as a fee based on the sales.

This charge ranges between a minimum of 3% and a maximum of 5% of your investments in single firm funds. The annual fee charged by the multi-firm starts at least from 0.75% all the way up to 2%. Moreover, they also take a share form future earning which starts from 10% and goes up to 15%

What are the Risks and Protections of Investing with EquityZen?

EquityZen's portfolio includes private firms with a strong risk/reward ratio. The 250 firms presented have returns ranging from a loss of 100% to a profit of 450%. Most have no prospect of dividends, payments, cash flows and may lose all of their value. Startup investment is a numbers game, with a small number of investors reaping large profits while the others fail. Diversification and successful selection yield the most significant outcomes. This necessitates large cash and ties with firms, which most investors lack.

EquityZen is a licensed FINRA brokerage with due diligence obligations to ensure that investments are suitable for their clients. But there is still no guarantee on the return. These investments are based on SEC Reg D, which means they fulfil specific standards for exemptions, but they are not typical registered assets according to the SEC and are thus only limited to authorized investors.

Conclusion

EquityZen brokerage is a great company to invest with for those investors who meet the criteria of pre-IPO stocks. Since it's a secondary market to invest in, the prediction of how well a company will do in future is not very certain, like the stock market investments. However, there is a lot of area for growth to invest in the private company market. Therefore, we recommend thoroughly researching the startups and firms before investing with EquityZen.