EquityZen, a New York-based fintech firm that operates a secondary marketplace for company-approved transactions in pre-IPO stock announced on Tuesday it secured $6.5 million during its latest financing round, which was led by Draper Associates. According to the company, the latest financing deal comes as private investor interest has picked up in unicorn companies valued at $1 billion or more. While sharing details about the funding, Atish Davda, CEO of EquityZen, stated:
“The Draper family nearly invented modern venture capital. We are excited to partner with them as we expand investment access to tens of thousands more qualified investors who are tired of sitting on the sidelines watching a small number of Silicon Valley insiders profit from the private returns. EquityZen’s secure and transparent online investment platform helps private investors diversify their portfolios with blue-chip private companies, not just early stage startups.”
Tim Draper, Managing Partner of Draper Associates, also commented:
“The IPO market is no longer feasible. Why would any company want to throw away $5 million per year to comply with all those regulations? Or subject themselves to the scrutiny of an increasingly litigious public shareholder base that usually includes a class action lawyer trawler? The private markets are opening up and EquityZen is a great solution to bring liquidity to private companies that want to keep growing without being saddled with the overregulation and fear that comes with being a public company.”
Davda added:
“Historically, these high-growth, private companies have been out of reach unless you can write a $20M check. We are making it available to qualified folks for as little as $20,000. The fresh capital from the Drapers will help us bridge this gap even faster.”
As previously reported, EquityZen uses multiple factors such as most recent funding round valuations, the stage a company is in its evolution and how soon it may (or may not) go public to help render a share price.