Frequently asked questions

What is private equity?
What is the advantage of owning private equity over other asset classes?
Why do we need a large group of retail investors to access private equity?
Who is InvestX Financial (Canada) Ltd. - "InvestX Financial"?
Who is InvestX?
How does the InvestX Financial​ platform work?
How do I sign up to use the InvestX Financial platform?
What is an accredited Investor?
How does InvestX Financial work?
Is Private Equity safe?

What is private equity?

Private equity is an asset class consisting of equity securities (shares) and debt in operating companies that are not publicly traded on a stock exchange. A private equity investment is generally made by a private equity firm, a venture capital firm, or an ultra high net worth accredited investor.

What is the advantage of owning Private Equity over other asset classes?

Private equity is a type of alternative investment often used by institutions, ultra high net worth, and other qualified investors. Historically, private equity has provided a much higher return than traditional public investments such as stocks and bonds. Professional investors have long understood that valuations made in the private markets are not as efficient as the public markets. This is often due to the small number of buyers, where arguably, the public markets are more efficient at determining valuation due to the large number of global buyers and sellers at any given time. Additionally, a publicly traded company has a higher cost structure it must maintain, in order to be public. This includes increased regulatory and shareholder costs, the distraction of senior management to hold quarterly calls, reporting requirements, running a business with shorter term priorities, and managing analyst community expectations.

Private companies often come with lower costs, leadership teams focused on longer term priorities, and growth capital, traditionally enabling them to achieve better returns for their investors.

Why do we need a large group of retail investors to access private equity?

Private equity has traditionally only been available to institutions, pension funds, endowments, insurance companies, and ultra high net worth qualified investors for three main reasons:

  1. Quality private companies do not want hundreds of small shareholders - the costs to raise thousands of small amounts, to communicate, manage, and transact with small retail investors are much higher than accepting 3 to 5 institutional investors who write a few multi-million-dollar checks.
  2. Securities laws did not allow non-accredited investors to purchase shares in private companies and also severely limited accredited investors ability to invest.
  3. Most individuals do not have the time or expertise to conduct the necessary due diligence on a private company. Additionally, these companies do not want thousands of retail investors going through their books, gaining confidential information and using their time and resources, which could be spent on executing their goals.

Who is InvestX Financial (Canada) Ltd. - "InvestX Financial"?

InvestX Financial is a registered dealer in Canada, specifically registered to distribute exempt market products. Registration is required in Canada for the distribution of exempt market products.

Who is InvestX?

InvestX Capital is a technology provider. InvestX has developed an online distribution platform for exempt market products and InvestX Financial has licensed this software from InvestX.

InvestX Master GP 1 Inc., a subsidiary of InvestX, develops securities products, specifically, single purpose vehicle - limited partnerships (SPVLPs). The purpose of each SPVLP is to aggregate retail accredited investors' investment funds to make a single investment in a private company or companies (which may be U.S. or Canadian), directly or indirectly.  Each time InvestX creates an SPVLP, a direct agency relationship exists between the SPVLP and InvestX Financial Canada because InvestX Financial Canada is acting as the agent to distribute the security product.

How does the InvestX Financial​ platform work?

The InvestX Financial platform aggregates all of the smaller checks from retail qualified investors, which may range from $2,500 up to $1,000,000 or more and then writes a single co-investment check alongside professional private equity (PE) firms in private companies.

Using the power of the crowd, retail qualified investors can access and invest in private companies at the same terms as professional PE firms, but with smaller dollar amounts that are more suitable for their individual portfolio size.

Each private company available on the InvestX Financial platform always has a PE firm co-investing. The PE firm has completed their own due diligence process and is typically making a multi-million-dollar investment usually the same terms as offered the retail accredited investors.

How do I sign up to use the InvestX Financial platform?

If you are an accredited investor and a U.S. or Canadian citizen, you can begin using the platform today by signing up and completing the membership process. There is no cost to join and no financial obligation.

What is an accredited Investor?

To qualify as accredited, you must meet one of the following criteria:

  • Alone or together with a spouse, you own financial assets worth more than $1 million before taxes but net of related liabilities
  • Alone or together with a spouse, you have net assets of at least $5,000,000.
  • Your net income before taxes exceeded $200,000 in both of the last two years and you expect to maintain at least the same level of income this year;
  • Your net income before taxes, combined with your spouse, exceeded $300,000 in both of the last two years and you expect to maintain at least the same level of income this year
  • You are currently, or were once, a registered adviser or dealer, other than a limited market dealer

Here are some other examples of accredited investors:

  • Financial institutions
  • Governments and governmental agencies
  • Insurance companies
  • Pension funds
  • Registered charities
  • Certain mutual funds, pooled funds and managed accounts
  • Companies with net assets of at least $5 million
  • Persons or companies recognized by the OSC as an accredited investor

How does InvestX Financial work?

InvestX Financial is a registered exempt market dealer in Canada, specifically registered to distribute exempt market products. Registration is required in Canada for the distribution of exempt market products.

Is Private Equity safe?

Before making any investment decision, you should always consult with your investment adviser to ensure that any investment is suitable for your portfolio, stage of life, and level of risk you should be taking. Private equity is an investment in a private company and carries additional risks to buying a publicly traded company. There are many risks which are typically outlined with each investment, however the two main additional risks with private equity are: (1) liquidity risk - the ability to sell your shares will be limited and (2) transparency risk - private companies have less financial and operating reporting transparency.