Pre-IPO Exchange Fund
Unlock the value of your Pre-IPO equity with an Exchange Fund
What problem does a Pre-IPO Exchange Fund solve?
Over the past decade, many employees of private growth companies have seen their company stock options increase enormously in value. At the same time though, they understand the risks of having so much of their net worth tied up in one company. During the current period of high volatility in venture capital markets, the risk to their net worth from a drop in the value of their company is significantly increased.
The obvious answer would be to sell their stock and use the proceeds to purchase a diversified portfolio, reducing their financial risk. However, it can be difficult to find a buyer for Pre-IPO shares. In addition, because their shares have seen such significant appreciation, capital gains taxes and brokerage commissions from the sale could potentially eat up more than half of their proceeds.
The Collective Exchange Fund was designed to address this problem. Shareholders of eligible companies can exchange their stock for an interest of equal value in a diversified portfolio of “unicorns” without triggering a capital gains tax or brokerage commissions.
What is a Pre-IPO Exchange Fund?
A Pre-IPO Exchange Fund is a pooled investment vehicle that allows employees of Pre-IPO companies to exchange their shares in their company for a limited partnership interest of equal value in a diversified pool of other leading pre-IPO companies. This diversification strategy reduces their risk while still enabling them to capitalize on the growth potential of a portfolio of emerging technology companies.
Perhaps best of all, contributing your shares into an exchange fund does is does not incur capital gains tax. That tax savings is effectively invested in the fund and compounds over time. For many employees, this can result in substantially more after-tax wealth than they would have received from selling their shares.
Why Choose a Pre-IPO Exchange Fund?
- Diversification: Reduce your risk from over concentration by trading a block of shares in a single company for an interest in a portfolio of many companies.
- Wealth Creation: Generate venture capital type returns by using your Pre-IPO shares to invest in venture-backed companies before they go public or are sold.
- Tax Savings: Exchange funds avoid the capital gains tax you pay if you sell your shares. Those tax savings are effectively invested in a high growth portfolio that compounds in value over time.
- Liquidity: Receive immediate liquidity from a non-recourse loan secured by your interest in the Exchange Fund and/or redeem you interest for cash at the end of any quarter after the first year.
- Expert Guidance: Our team of experienced customer service representatives will listen to your financial needs and recommend a customized solution to meet those needs.
Getting Started:
Ready to explore the exciting opportunities presented by the Pre-IPO Exchange Fund? Contact our team today to discuss how this innovative investment strategy can align with your financial goals.
