HOW PRIVATE INVESTORS CAN INVEST IN PRE-IPO … · HOW PRIVATE INVESTORS CAN INVEST IN ... Netflix Spotify, Dollar Shave Club 23% Twitter, Tumblr, Yext Indiegogo, ... ($350M hedge

HOW PRIVATE INVESTORS CAN INVEST IN PRE-IPO COMPANIES

MAINTM Webinar Series

October 18, 2016

Webinar Overview

Millennium Trust Company and EquityZen are not affiliated.

Millennium Trust does not endorse any platform or investment, including platforms and investments accessible through MAIN. Millennium Trust performs the duties of a custodian and, as such,

does not provide any investment, tax or legal advice, or perform any due diligence on behalf of account holders or any third party.

Moderator: Presenter:

Meg Zwick

SVP, Director of Alternative

Custody Services

Kaylock Yam

Distribution Lead

How Private Investors Can Invest in Pre-IPO Companies

Agenda

• Public vs. private markets

• Institutional private investing experience

• Democratizing pre-IPO investment access via technology

o Research and monitor potential investments

o Secure and transparent transaction structures

4 October 2016 CONFIDENTIAL

Investment returns are increasingly generated in

the private market.

5

Public vs. private markets

CONFIDENTIAL October 2016

Shift from public to private markets

Source: Andreessen Horowitz

6

The shift from IPO to late-stage funding has caused returns to move from public to private investors.


Access to private markets has been limited to institutional investors.

7

Institutional private investing experience


Fund Avg. Net IRR Previous Investments Current Investments

52% Etsy, Twitter, Tumblr Foursquare, Duolingo, MongoDB

49% Etsy, Facebook, Groupon Cloudera, Dropbox, Hotel Tonight

41% Apple, Google, Oracle Instacart, Airbnb, Stripe

41% Nest, Facebook, Groupon Square, Jawbone, Spotify

38% Nest, GrubHub, DoubleClick Bonobos, Outbrain, Nutanix

35% Twitter, Tumblr, OculusVR Foursquare, Slack, WealthFront

34% ExactTarget, Groupon, Wayfair HotelTonight, Nutanix, Practice Fusion

30% Netflix, Twitter, Zynga AppDynamics, Dropbox, Prosper

26% Facebook, Groupon, Netflix Spotify, Dollar Shave Club

23% Twitter, Tumblr, Yext Indiegogo, Hootsuite, Qualtrics

Private investing experience – Venture Capital

Sources: Preqin and Pension returns (CalPERS, OPERF, UTIMCO) Note: Past performance does not guarantee future results.

8 CONFIDENTIAL October 2016

Private investing experience – Endowments and Foundations

Source: Cambridge Associates Note: Past performance does not guarantee future results.


Historical limitations for individual investors

• High investment minimums ($1M+)

• Difficult to access private funds

o High investor fees (management and performance fees, including carried interest)

o Exclusive availability for pre-existing investors

• Broader market inefficiencies

o Relationship-driven market

o Lack of available research

o Inability to customize investment selection

10 October 2016 CONFIDENTIAL

pre-IPO investing for private investors

Democratizing pre-IPO investment access via technology


EquityZen Overview

EquityZen is a technology platform to invest easily and securely in pre-IPO companies

• Shares purchased from pre-existing

shareholders (via secondary transactions)

• Opportunity to invest in companies before

they IPO or get acquired

• All transactions are company-approved

• Paperless transaction process

• Minimum investment: $20,000

• SEC, FINRA registered


How does EquityZen get shares of pre-IPO companies?

Shareholder Content + Marketing Company-Friendly Approach

• All transactions are company-approved

• EquityZen Liquidity Manager

• Online deal-room for companies

• Stores a full audit trail of transactions

• Includes share price history for all previous transactions


Recently transacted deals on platform

Opens door to

further sourcing

via follow-on

transactions

$30M+ transacted in 45+ companies

4,500+ shareholders already on EquityZen platform

Valuation: $5.9bn

Valuation: $2.2bn

Sourcing advantage through EquityZen’s platform

14

Valuation: $5.5bn Valuation: $800m

Valuation: $700m


Valuation: $2.1bn

How can an investor keep track of 177 Unicorns?

Research and monitor potential pre-IPO investments


Source: CB Insights

EquityZen has a tool to research and compare private companies

16

EZ Advantage allows investors to filter companies by sector, VCs, funding, and other factors…

…and select companies to compare


EZ Advantage: company comparison

17

A side-by-side summary and one-click “Add to Watchlist” to easily monitor potential investment opportunities


EquityZen has devoted significant time and

resources to ensure full compliance.

Secure and transparent transaction structures


Secure and transparent transaction structures

19

• Company-approved • Investors are members of an LLC that

owns the shares until a liquidity event (IPO or acquisition)

Traditional share transfers


Established partners and compliant operations

20

Cash Management Fund Administration

Counsel Compliance

Auditor

Supervision & Insurance


The pre-IPO secondary market continues to

grow… fast.

A differentiated asset class


A growing asset class that is increasingly accessible

Addressable market for 177 largest VC-backed companies is $150 billion

$629 billion (2)

Employee + Founder ownership

est.15% est.10% ~$150 billion

Available Investor Supply

Addressable market

Secondary transaction volumes in private companies have been increasing (1)

Source: (1) NYPPEX, (2) CB Insights

Total valuation of 177 $1BN+ VC-backed firms

$0.3 $0.5 $0.6 $0.9 $1.3 $3.0

$5.7

$2.4 $4.6

$9.3 $8.2

$12.4

$30.0

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(billions; includes LP transactions)


EquityZen’s team and management

23

Atish Davda Founder, CEO

• Former VP of Product at Ampush, grew from 1st employee to $30M revenue business

• Previously investment analyst at AQR Capital Management

Phil Haslett Founder, Head of Investments

• Former VP at Pomelo Capital ($350M hedge fund) • Previously at Barclays Capital (Proprietary Trading) • Series 7, 24, 66 and 79 certified

Shriram Bhashyam Founder, Head of Legal Affairs

• Former attorney at Shearman & Sterling focused on securities and Broker-Dealer regulation

• Series 7, 24 and 66 certified


Kaylock Yam, CAIA Distribution Lead

• Former Executive Director and Key Accounts manager at Arden Asset Management

• Built distribution for private and registered multi-manager hedge fund products

• Series 7 and 63 certified

• Founded: 2013

• Received funding from: 500 Startups, WorldQuant, sovereign wealth funds, family offices, wealth managers, and executives from Finance, Venture, and Law around the world

• EquityZen Securities LLC is a SEC-registered broker-dealer and FINRA member

Press coverage

“Individual Investors like you and me have been shut out. Until now…”

“This isn’t another one of those crowdfunding platforms that have been emerging over the market recently. Instead this is a quick way for investors to

invest in startups.”

“Secondary markets today are broken … EquityZen, by contrast, is designed with the company in mind, giving it control over who gets to sell equity, how

much, and when.”


Visit us at: www.equityzen.com/lp/mtinvestor

ABOUT MILLENNIUM TRUST COMPANY

• Privately-owned independent custodian

located in Oak Brook, IL

• Over 481,000 client accounts

• $19.6 billion of assets under custody

• $2.5 million in expanded FDIC coverage

provided by multiple banks in a Cash Sweep

Program for idle cash in retirement accounts

• Regulated by the Illinois Department of Financial

& Professional Regulation

27

WHY CHOOSE MILLENNIUM TRUST

Client Focused

Expanded Custody Solutions

Technology Enabled

Streamlined Processes

Account

Management Tools

28

Platforms

and

Portals

Marketplace Lending

Crowdfunding

Hedge Funds

Private Equity

Precious Metals

Other

SOURCE: Millennium Trust Company, Schematic Illustration

Millennium Trust does not endorse any platform or investment, including platforms and investments accessible through MAIN. Millennium Trust performs the duties of a custodian

and, as such, does not provide any investment, tax or legal advice, or perform any due diligence on behalf of account holders or any third party.

MILLENNIUM ALTERNATIVE INVESTMENT NETWORK TM (MAIN)

Question & Answer Session

Platforms

and

Portals

Marketplace Lending

Hedge Funds

Private Equity

Precious Metals

Other

MAIN WEBINAR SERIES

Tuesday, November 15

3:00 p.m. CT

Presented by: Street Shares

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Thank you for attending!

www.mtrustcompany.com

866-388-9419

www.equityzen.com

800-936-7943

Documents

HOW PRIVATE INVESTORS CAN INVEST IN PRE-IPO … · HOW PRIVATE INVESTORS CAN INVEST IN ... Netflix Spotify, Dollar Shave Club 23% Twitter, Tumblr, Yext Indiegogo, ... ($350M hedge