Public stock prices are at an all-time high and sagacious investors are ogling pre-IPO giants, vying to place the earliest bids on the next Palantir or Airbnb. Pre-IPO is perhaps the most coveted asset class but with a high barrier to entry, navigating pre-IPO dealings is still a daunting process for many and can make an investor feel more akin to Alice In Wonderland than Warren Buffet. InvestX works to democratize the public market and streamline the process of private equity investing with the state-of-the-art private equity trading platform, InvestX GEM.
The most obvious obstacle is the issue of gaining access to the private market. Private companies have traditionally kept their doors locked and guarded to retail investors and broker dealers. Only a handful of the largest buy side firms waving checks north of $100 million are invited to join the late stage rounds, along with existing investors and company insiders.
Once an agreement is made between both parties via contracts, the target company is informed of their intentions to transfer ownership. The targeted issuer will then begin the ROFR (Right of First Refusal) process, which means the company’s existing investors could block the transaction. This long and arduous process greatly restricts access and limits liquidity. If the proposed transaction indeed passes ROFR, which could take 30-60 days, they can finally close.
Since private companies are not obligated by equal regulatory standards as public companies, access to financial information is asymmetrical and thus gaining transparency and real time price discovery is a feat. Once due diligence is complete and ROFR is surmounted, the incurred latency is enough to distort the terms of the deal, a condition broker-dealers who are accustomed to transacting over milliseconds in the public market may not be able to stomach.
With decades of experience and industry expertise in private markets, InvestX solves for the complexities of transacting in the private markets by allowing block and single share trading and eliminating the typical 5-10 year holds of private investing. InvestX buys institutional sized blocks of the private companies, navigates ROFR and connects broker-dealer clients to real time information and trading, backed by rigorous due diligence, providing the most accurate information on each investment- instead of simply matching buy/sell interest.
InvestX GEM is designed to deliver institutional broker-dealers access to private equity, empowering broker-dealers with the ability to offer this exciting asset class to their clients. The GEM platform connects a network of SPV’s, which are customized limited partnerships for each private company. Shares of the SPV’s can then be fractionalized and traded, enabling investors to acquire shares of pre-IPO giants in retail size allotments while being provided with liquidity and guaranteed transactions. By integrating back office work flow solutions and software that connects to DTCC, GEM mirrors the same clearing process that happens in the public market.