Investing Beyond the Ticker: Exploring Private Market Opportunities

But, we're gonna have a good conversation today and we're actually bringing somebody in to chat with us a little bit about the market, but also more about the private market and the opportunities there.

That's right. We're gonna be talking today with, EquityZen. Since 2013, the EquityZen marketplace has enabled the buying and selling of shares in private companies. And joining us, this is a good get Lindsey. This is Atish Davda, co-founder and CEO of EquityZen. So I would say, folks, sit back and, Lindsey and I normally talk about what's going on in the public markets.

I think you're gonna be fascinated by the conversation we had with Atish and the private markets. Stay tuned. 

Lindsey, I gotta tell you, it has been a wild ride in the market the last couple days. And I'm really happy that we've got, Atish Davda, the co-founder and CEO of EquityZen to chew through the fat on the market with us, share his insights. 'cause it's gonna be a little different than ours, right?

Atish and EquityZen, they're really steeped in the private markets. But I think we'll have a great conversation kind of balancing our public market our public market thoughts with what Atish has to say. let's just kick it right off. Lindsey. what do you think about the market?

Are we just simply, rebounding from deeply oversold levels, or is there something more going on?

[00:01:43] Lindsey Bell: Chris, I, I think that based on market dynamics, it's very normal to get a bounce after very deep declines. So I think there's still gonna continue to be volatility in the marketplace.

But I also think it's a reminder that this is why we stay invested because. You can miss big bounces, like what we're getting today, which we're taping this on Tuesday. they fall typically follow some of the biggest down days in the market. So you can't miss those or your overall performance over the long term really can be impacted.

[00:02:15] Chris Versace: Totally agree. at the Pro Portfolio at The Street, we did not sell anything during the market sell off last week. In fact, we actually picked up some shares, earlier today in Marvell. Ticker symbol, MRVL. but Atish, we see the public markets gyrating you in EquityZen sitting there really helping folks, invest in the private sector, private companies.

What's your take on all this lot of noise or?

[00:02:44] Atish Davda: look, I, you're absolutely right that private markets do behave differently than public markets do. What we see over at EquityZen is this. We facilitate trading in these private company names and trading is a lot less frequent. It doesn't happen every millisecond.

in fact, these trades by definition, take multiple days in some cases to, to close. And that's actually, an inherent positive that we see is, People actually have a chance to digest the news. It's not just on the rumor that everyone's trading, They're trading after the rumor's been analyzed five ways from Sunday. Confirmed.

and, candidly from that standpoint, structurally, it actually does dampen a lot more of, the itchy trigger, trigger finger reactions, that we began seeing starting last week, starting Wednesday, even anticipating the big announcement of the Liberation Day tariffs. We just started to see, a lot of market movement downward.

and, today it's nice to see the market be up a little bit, but, candidly, on the private market side, we see. the public markets, a lot of the shareholders in the private markets are, gonna wait and see because they need to make multi-day, multi-week decisions in the first place.

and look, the good news there is that they're gonna have a bit of time to see where the dust settles before they need to pull the trigger on, wherever, whatever the new levels are, that are gonna settle down.

[00:04:21] Chris Versace: it's interesting, because I do think even though we're bouncing today, you know, Lindsey, you and I always talk about how it's important to play, checkers.

Sorry, I always messed this up. I always wanna say chess, not checkers, but I say it the other way around. Let me just say it once and for all. Play chess. Not checkers with the market. So gaming out some moves ahead. And as, we're sitting here, there are some, hurdles that the market has to climb over yet, the start of the, Trump reciprocal tariffs, China's threatened retaliatory tariffs.

Trump's saying, Hey, China, if you do this, gonna increase your tariffs. We don't know what the EU is gonna do yet. And then corporate earnings. Lindsey, I, guess my question to you is. How sustainable do you think this move is? Or you think we're just gonna be choppy?

[00:05:09] Lindsey Bell: I think we're gonna be choppy from here.

There could be more downside, but I think it's gonna be up and down depending on the headlines. I think it's gonna be very headline driven, I guess is what I would say. And Atish, I'm curious, I wonder if over the last couple weeks, especially last week, have you seen an inflow. Of, cash or, investors looking for these types of opportunities because I feel like investors, the sentiment is still very nervous among investors right now.

And I wonder if they're looking for alternative opportunities. And I do. Would pri a private investment be considered maybe a more or less volatile, investment for folks looking for safety and somewhere to hide in the near term?

[00:05:51] Atish Davda: Yeah, look, there's no doubt that private investments are by definition because you don't see, a, kind of a ticker going by every second.

You're just not gonna have the same frequency of mark to market, because of that and a bunch of other reasons, like the illiquidity premium that investors get. I do think private markets remain an attractive component of their portfolios. Over the last couple of weeks, what we've seen is two things.

We've seen investors, continue to invest in, the sub-sectors that are popular. So you think about ai, you think about cybersecurity, these sectors, then the enthusiasm behind them, they're not going anywhere. And the investors, deals that, like I said, sometimes take, several weeks to close, investors that had committed to those deals, they still, before they can actually, pull their capital.

They said, no. In fact, we want to double down. If any other investors have dropped out, we want to take their allocation because again, they're making 10, 20 year bets. In this case, they're not trying to buy on Tuesday and sell on Thursday. And so inherently you have buy and hold. Dynamics coming in because of that, you have a lot of folks actually recognizing the buy side opportunity.

And that brings me to the second dynamic that we've seen over the last, not just a couple weeks, but the last really since mid-February, since the uncertainty in the markets really began to take hold, is that you see the supply curve coming in. You see the sellers come in and say. Look, I may have, let's make this up.

A hundred thousand shares in a high growth company that's maybe two or three years away from an IPO, trying to, pursue an IPO. Maybe I'll take, 10% of the chips off the table. now that I see the market coming back down, you, say, okay, I'll still take 10% of the chips off the table.

I still have nine times more in the company. but why wouldn't I diversify a little bit? Maybe I actually want to go and buy in the public markets, or maybe I wanna buy gold or whatever it is. They wanna diversify on. These are highly concentrated positions that a lot of the sell side of our port, of our marketplace sees.

this is a quick reminder for, the listeners that may not be familiar. What equities then does is we facilitate transactions between private shareholders of these high growth. Private companies that are typically two to five years away from an exit, and we match them up with high net worth individuals, family offices, and unsurprisingly, a lot of, financial advisors, who are recognizing that the vast majority of the American investor has an allocation of 0%.

To this asset class. and if you're only investing in public stocks, you're investing in an increasingly concentrated, increasingly volatile, fewer number of companies. I. And we're helping a lot of these financial advisors grow the allocation for their portfolios from 0% to 1% to 2%. No one wants to put 10, 20% of their portfolio in here, it really shouldn't be zero either.

And that's effectively what our business does. and candidly, over the last 10 days in particular, unsurprisingly, we've had a lot of folks come and say, Hey, are we seeing some real buy opportunities here? Because some sellers. need. The liquidity that they thought they were gonna get from public markets, it's gonna be a bit harder for them.

[00:09:16] Chris Versace: that kind of died. I was gonna say that really jives with some of the comments we've heard about, like margin calls and other things. So not, that surprising. but, just two questions. You, mentioned IPOs, you mentioned exits and stuff. Just help us understand, I think most people would think, oh, private companies, IPOs are the likely way.

for those investments to be monetized, but there's also m and a. can you just talk to the breakdown, between the two?

[00:09:45] Atish Davda: Yeah, absolutely. and I'll actually throw in a third way as well. So you're absolutely right. The vast majority of these companies, that we facilitate transactions in these private market.

Growth companies. they're, they, have backers, they have venture capital backers, they have private equity backers, growth equity backers, and they are incentivized, in order to drive, a, big outcome, a big exit. So for that reason. Typically these companies are positioning themselves to go public, via an IPO or via direct listing or via a spac, a merger.

But there's more ways, exactly as you said. a lot of these private companies, can exit via m and a. So you could have a larger private company, or in many cases, a public strategic investor. Come along and say, you know what? This is the piece of the puzzle we were missing. you might consider this happening, especially in a lot of the, we just saw this happen with Google, with their massive $32 billion acquisition, of a private company.

Exactly. And m and a doesn't have to mean a small exit. M and a can be a large exit, but it is absolutely a, an alternative. To going public. And as I mentioned, there's a third way that private market investors can also get liquidity. historically EquityZens about 13 years old. Prior to, equities, end offerings, being available.

What used to happen is that you would buy, at, call it year five of these private companies lifecycle. they're not really going public until they're teenagers. And so you're really buying for 10, 15, maybe even longer, number of years. What EquityZens, begun offering is for a lot of folks saying, look, you can buy in year zero, but then you don't have to hold it for 15 years.

These are buy and hold investments. These are illiquid. But if after 3, 4, 5 years you are happy with your return, you wanna. Recycle that capital elsewhere, you can actually just hit a button and re-list that piece of private company stock for sale where someone else may come in. So I'll just give you an example.

You have angel investors that invest in the early stages of the company. These are, folks investing with the companies, zero one years of age companies in its diapers. you have a public company that's graduated college. And the way we like to think about it is there's actually a tremendous amount of risk adjusted.

Return premium that's available just because people aren't aware that they can even access it. And so in, in these in-between years, high school years, college years, that's really where equities and likes to play in a company's life cycle. Someone's been invested in this company for five years, zero to five.

We help find investors that wanna hold it from five to 10 or five to 15. until the company eventually, exits and, typically one of, one of these three ways, if it's a successful outcome.

[00:12:43] Lindsey Bell: I think that's really important because, there are other companies out there I don't know, a Wefunder or others that, really work at that diaper.

Age stage as you, say, and they'll take smaller, much smaller investments. You're working with companies that have already proven their business model. So maybe if you could talk about the failure rate of some of the companies on your platform. One. but then number two, talk a little bit about how you can invest.

'cause it's not just, you don't do just direct share purchases. You go you, you build funds. And so I think it would be really helpful for listeners to understand how they can invest through you in these types of companies.

[00:13:20] Atish Davda: Yeah, absolutely. Thanks for asking that question. You look, you're absolutely right and I like to think about a lot of these companies as athletes, right?

Sure. you can bet on, and you, can, bet when someone's doing great at a toddler gymnastics class, just how great an athlete they're gonna be in college and beyond. but really when they're already, in a competitive field in high school and college, that's really where we like to bring, access available.

And so yes, you have a bit more data work with a lot of the companies that we facilitate transactions in. usually at least $500 million or more in enterprise value. Typically over a billion. E Exactly. To your point, Lindsey, these are not, power law, early stage VC investments where you're just hoping you're, gonna make 20 bets, spray and pray, and then you hope some of them, end up, returning all the capital.

No, we, like to be very clear with our investors about this. we are bringing opportunities to hit singles, doubles, and triples. If you, if, what you want is home runs this asset class, or at least through equities, then is probably not the best opportunity for you. Now, if it's every now and then, we'll end up getting, five x 10 x returns on an investment.

That's great. That's not the goal. The goal is to very consistently get two or three x or four extra capital. In two or three or four years. and that is what we, really put into our filters in order to figure out which companies are appropriate, which companies are not really suitable for our platform.

and ultimately we make it available to investors to say, okay, look, we will provide individual company access for you to build your own portfolio. Hopefully you're doing it with a financial advisor, that's able to. give you a small allocation of your portfolio so that you can, make some fun investments.

Something you can talk about on the golf course. But it's not just, it's not these meme coins and it's not these speculative assets like, buying wine or art. There's fundamental value here that we're bringing to the market. and, now to answer your second question, what we realized when we were offering these individual companies is a lot of financial advisors were saying.

Atish, this is great. great access for the marquee names, the, Stripes, the Databricks, the SpaceXs of the world. but. You actually have a lot of value in, companies 10 through 50, that may not be household names, but actually might be great investments. but I can't tell one cybersecurity company from another.

So do you have any options for us? And so what we begun, what we began doing, Lindsey, is creating these basket funds. so now someone can come in with as little as, $5,000 or as much as $5 million and put their capital into a basket, not just individual investment. And these baskets can give you access to a whole vintage over, call it a 12 month investment period, or into specific themes.

We have these themes, AI fund or future of FinTech fund or cybersecurity fund. And it's just a way for folks to say. I wanna bet on the rising tide. I don't really wanna make concentrated bets on individual boats here. And that's been a, unsurprisingly a pretty popular product for folks, again, who are just entering the private markets.

[00:16:43] Chris Versace: And,

[00:16:45] Atish Davda: sorry,

[00:16:45] Chris Versace: Lindsey, I was gonna say Atish, you had me at theme. but, let, me. Back us up just a second because I'm, curious, you just said that, on the platform you really have to screen out companies, right? To to use the analogy, separate the cream from the rest of the milk, right?

Yeah. So what are some of the things that you look for in these companies? Because, different investors have different screening processes, and I'm just curious as to what, is it that makes the cut at EquityZen?

[00:17:18] Atish Davda: Yeah, Look, that's a great question. Let me just set the stage a little bit.

there's over 12,000 companies that we track. There's about 500 companies that we have facilitated transactions. and we sit on the cap table of, so we will actually, put together a special purpose vehicle with the company's blessing, get onto the cap table, have a share certificate issued, to inequities and managed fund.

and again, that's a very small set of the. Over 10,000 companies that are available. and in fact, about one out of 20, only one out of 20 opportunities that's listed actually gets to, be available for purchase for the investor base in the platform. Why is that? Again, it's because, being a private company, you're not going to get access to the full sets of disclosures that you can for a typical public company.

Typical public company is required by function of Being a registered firm to disclose all sorts of, contracts and financials and, private information, with, the SEC for private companies, that's not always the case. So what equities then does, we invest a lot of resources in this, is identifying all publicly available information about this private company and putting it together in one spot.

Okay. By doing that, first of all, investors have the ability to understand, okay, what's the business model? Who's the management, team, what's the, cap table of this company? How much money has it raised? What's the liquidation preference? What's the waterfall in the event of a billion dollar exit, $3 billion exit, $500 million exit.

and so there's a, a ton of these kind of calculator type tools that, folks can use in, information that we compile. But some of the criteria that we look for, Chris, is, one of the key ones is has a marquee investor recently set a price on this company. And if so, for what shares and what does that mean in terms of the waterfall valuation for other shares?

So a typical company on our platform will have raised capital in just, recently, like less than three months, at most, six months prior. In a lot of these cases, the incoming investor are large institutional investors. 'cause these are late stage companies. They don't need $10 million. They need a hundred million dollars, they need $500 million of capital or more.

And so for companies like that, you actually have these marquee institutional investors that are coming in, pouring over the books. and what we like to, at least try to, offer our, investor base is, and our financial advisor base is education. This is not a public stock.

This is not a liquid stock. This is not you buying Google shares on Monday, with the ability to sell it on Thursday. And so you should really know. What you're stepping into and what you're buying. And so by making a lot of this education available, what we find is financial advisors and clients alike.

What they like to do is they say, look, I'm never, I, as an individual, I'm never going to, get as much of a deep analysis going as Sequoia. Benchmark Andries and Horowitz will. And so if they've just valued this company less than three months ago, and based on that, I can invest potentially at a discount because, because of the illiquidity premium, hey, that might be a, bet that I'm willing to pay.

And so a lot of times these are folks backing established, backers, that have very recently poured over the books and said, you know what? Based on my institutional knowledge. 32 bucks per share is the right price to pay. and then the individual sellers can decide, am I willing to sell at a discount, which many are, or is this the case where, I can actually potentially sell at a premium?

And the investors on the other side are putting in their own orders, and we just allow the market clearing price too, to take place with the company's blessing. Every single one of our transactions goes through the company. It's compliant with the company's transfer restrictions. and so in many ways, instead of thinking about this as a typical public company stock that you can just buy and sell, which is how simple we've made the process, what we're actually doing is every single one of these transactions is like little mini IPO that we have just spent the last 12 years automating, standardizing, providing a blueprint.

To our investors saying, okay, right now we're in day one of the process. By, day 30, your investment's gonna close and every step along the way, you, you have, a variety of options to, to either invest more, invest less, make some different decisions. So it's an interesting, avenue.

That, at this point we have a little over 700,000, 750,000 households on our platform. and we've done, again, over 45,000 private placement transactions at this place. And so over, the last decade, we've just spent a lot of time trying to make what sounds inaccessible, not only providing the access, but also providing a bit more of the, how to guide, for a lot of folks.

[00:22:38] Lindsey Bell: So talk to me a little bit about dilution. is, dilution a a big risk here given how late stage these companies are? Or is, does it even matter because you're assuming that the valuation goes up significantly enough that it offsets any dilution?

[00:22:53] Atish Davda: Yeah, it's a good question. Look, first of all, it's important to call out that because these are secondary transactions that equities and facilitates.

The transaction itself is a non-dilutive transaction. We are, buying shares that are already been issued. And, someone else is purchasing the same shares. the company's not issuing new shares in these cases. and so that it's a really important point. I just wanna highlight that because the act of buying itself and others buying after you does not automatically make it a dilutive investment.

But Lindsey, you're absolutely right. A lot of times, our transactions will take place with the company expecting to go public in the next 12 months. and then guess what, the government announces tariffs and all of a sudden the IPO window closes again, for, a few weeks or a few months, and the company has to kick the can down the road circle, which is a, company that actually tried to go public back in 2022.

Right, at the tail end of the big runup that we had. and unfortunately ended up pulling its listing and then just tried to go public again. and, I think we're all hoping third time's a charm for them. but, in, in, in effect what could happen, I. Is a company that says, look, I think we're done with the last round of capital.

They could, market dynamics can change and they could end up raising a new round of capital, which would be dilutive. and it's important to call out that there's just no way, just second public market investing. There's no way to really predict even what the best plans are that these private company management will lay out there, is exactly how the company will go.

What we do find, however, is that, again, because these are slightly more mature companies. They're not mature compared to Apple in a public sense, but they're way more mature. They have, they have actual executives with experience. They have a board that's ready to bring a company public in a lot of cases, or in the midst of that transition compared to a lot of the earlier stage venture investing, which EquityZen does not touch.

For this reason, is actually where the opportunity comes in. the example I like to, always go back to, it was a big, real light bulb moment for us back in the day. This is. I'm gonna date myself, but I'm going back about eight years, nine years. we had one of our investors, in, one of our clients, tell us why they invested in Spotify.

They made two or three invested in investment in Spotify. This is back when Spotify was still a private company and we had facilitated a bunch of transactions in them and they said, I was at a barbecue and my daughter and all of her friends, the only thing that they would use was Spotify to listen to music.

And that, that really stuck with me because more and more what we're seeing is that these apps we're using, whether on our phone or on our devices, or, just in day-to-day life, real innovation comes from these private companies. These are at the cutting edge of innovation. They're gonna be private.

and, the typical company's, a teenager now. And if a company was gonna go public at 13, guess what the last three years means, that they could easily be a 15-year-old by the time they go public. And for this reason, it's really important for folks to really bring a buying hold mentality as opposed to a, I'm just gonna invest in this name because, it's, it's what everyone's talking about.

I would say the vast majority of the investors on our platform, really have a, a connection with the product of the company, and they've just been boxed out of the ability to participate in the value creation of the company. So what we're doing in many ways is allowing the fans of the company to not, to give them just one more reason to talk about the company and also allow them to participate in the journey as the company continues to mature.

[00:26:47] Lindsey Bell: and I that like dovetails with what you're seeing in the public market, in the IPO market. We really haven't returned to IPO levels that we were at pre pandemic. And the other thing too that you're noticing is, that it's the larger companies, when larger companies go public, they're the ones that have the greater returns in the public market, at least say in the first year, rather than when the smaller companies go.

So really there is that value generation. In the private markets, which kind of makes the case for what you're doing. Maybe that's part of the reason that it's occurring is because there is more access to capital sway. It gives the company more time to mature and prove out their business model and prove out their trajectory going forward.

so that makes a lot of sense. You talked a lot about tech companies. Which may, we're just totally in a tech, wave. I think, and, the world is, being much more in connected through technology. What other sectors, or industries are you seeing on your platform? really take advantage of the private markets?

[00:27:48] Atish Davda: Yeah. Look, first of all, it's worth calling out that technology is just pervasive. it is, just it. It's, pervasive. It's, impacting all sectors. It's the same way that if we, I'm really gonna date myself now. We used to call companies, internet companies back in the day, and now there's no such thing as a non-internet company.

there are a. Course, but there's very few companies that don't have some internet presence, some commerce going through it. and Lindsey, I like to really think about a lot of private company, sectors really as, yes, we, we call it technology, but it's agriculture technology, it's food technology, it's, insurance technology, wealth technology, financial technology.

AI of course is another one of these. things that initially starts off as a vertical, but you realize this isn't a slice of the pie. It's actually a layer on the entire pizza. And I think that's what's gonna happen more and more. and so yes, technically, the, the way these companies would be classified initially.

would be technology companies, but it's not just software. we're talking about, firms that are, building hardware in some cases, or again, when I said agricultural technology, we had firms, we've facilitated transactions in firms that have done genetic, genetically engineered seeds and, vertical farming.

And, that's just on the food side. And I, think to answer your question, I think it is way more pervasive one. Key criteria that we look for, however, is a legitimate pursuit of an exit in a reasonable short timeframe. Okay? And for example, a typical, private equity backed firm that wants to remain private forever, that is not like Koch Industries is a private company.

It's not one that would be suitable for. Transacting on EquityZen. and there's actually a lot of these private companies, that are just perfectly fine and make sense for them to remain private. Bloomberg is another great company that will just remain private for the foreseeable future.

Probably not a great fit for transacting on EquityZen. And so what we look for is this driver this. 10, 12 year fund life. this concept of, I have an lp, I'm a gp as in as therefore as a gp, I'm a steward of the LPs capital at some point after return it. and so it's really that, that driving force of seeking an exit that we look for.

and as part of that, Lindsey, what we learn is. that does, you know that if you follow the money, a lot of the money does tend to go into technology. It does tend to go into, health tech or what have you. and, so it's, I would say it's more of a correlation than a, causal relationship.

but one of the things, of course, that we do want is because we're not making control. Transactions happen. We do want some forcing function for the company to eventually, yield liquidity to even the people that are coming in at year five. It's okay if it's not at year 10, 12, 13, but at some point there should be avenues for liquidity for them.

[00:30:59] Chris Versace: But Atish, what happens if a company continues past those teenage years, college years, let's say graduate school years, right? Yeah. move

[00:31:08] Atish Davda: back into the basement.

[00:31:09] Chris Versace: Yeah. Yeah. yes. Exactly. Exactly. so what happens then, because if it's not monetized, does it just continue to live on the platform as a private company that could be just a private company.

[00:31:23] Atish Davda: Yeah, so it's a great question. Look, I think this is a, this was not the key reason why, but a great use case for, what we call express deals. This concept that I mentioned earlier, where even if the underlying investment has not exited, an individual's investment can still exit. and so we've allowed people to say, look, I really came in here to buy and hold for five or six years.

I really believe in the stock. I wanted to capture it before the public market, flooded in. But I'm happy with the return now. it's time for me to exit or, Chris, to, to your point, sometimes the company's plans of going public get delayed in that case. The, initial investor can hit a button again and say, I'm ready to let this investment.

Sure. For me, but someone else can come in and say someone else, says, you know what? I actually wanna hold this, for a long time. Because even if the company potentially starts issuing dividends, hey, that's something I'm interested in and right, it checks my boxes, but maybe, it checks Joe's boxes but not Susan's boxes.

And that's okay.

[00:32:27] Chris Versace: So it sounds like though, that, if I want to get into a company or potentially get out of one, yeah, it's not going to be a quick process, like you said earlier, but it almost sounds as if that if a company moves into that graduate level that the time to exit could be even longer.

[00:32:45] Atish Davda: it could be, look, at the end of the day, these are ill liquid investments. Here's what we do find. What we find is, in our 13 years of doing this, when we started. These transactions would take six months and you needed a minimum of $10 million to participate. And today, these transactions can take as little as one day, and you can invest at $5,000.

Now, we like to think that EquityZens played a big role in helping drive that. we're not the only ones. Of course, a lot of traditional banks have come in and also helped shine a light on it. BlackRock recently came out. Larry Fink came out and said. Private markets need to be a component of everyone's model portfolio, right?

So they've added to their model portfolio. You have the large private equity firms doing this. I say all that to say this. I think what we've identified is what used to take months, can now take days, and what used to require a very large kind of, entry point. while now it's a lot more accessible.

The un, the fundamental nature of these companies, just like any markets, has not changed. However, meaning if you really wanna sell, there's probably a buyer out there. But that's where the word liquidity, it's not just about how quickly you can get your money out, it's how close to the most recent price can you get your money out.

And I think just like what we're seeing with public markets, there's a lot of people today that say, oh, public markets are super liquid. Yeah, sure there are, but your a hundred bucks is worth 80, between Friday and Monday. And I say that in just as someone that has also been on the rollercoaster ride, with everyone else, but I just point out that, in that way, private markets are not that different than public markets.

And liquidity is really a function, not just of how quickly you can get capital, but also how much you're willing to deviate from the most recent share price.

[00:34:35] Chris Versace: I also think though, that, you mentioned BlackRock just now, but there's other things that are happening that I think are shining the spotlight on this type of investing opportunity.

And one of them is something that you guys recently did with Yahoo Finance. Can you talk a little bit about that?

[00:34:49] Atish Davda: Yeah, absolutely. And, thank you for bringing that up. Look, our mission EquityZen's mission from the very beginning 13 years we've been building This is to bring private markets to the public.

And Yahoo Finance, is a phenomenal. Property, with over, a hundred million users, every single month. and in the spirit of democratization equities and, I think found a really great partner with a shared ethos where they wanna empower the investor. That's. The early adopter, the early majority, the person that wants to put in the time, that actually has a bit of a passion for it, that does their own research, that actually thinks about it on nights and weekends.

that's wonderful equities. And again, like I said, we have 707 50,000 households on our platform right now. and it was a very natural partnership between equities and, Yahoo Finance because Yahoo Finance has begun offering private company pages now. As a compliment to their public company pages, and in one spot, they can allow Yahoo Finance users to.

Construct portfolios, not just with public company stocks, which they've always been able to do, but also add in private company stocks. And this is information that EquityZens, providing to Yahoo Finance for the benefit of not just Yahoo Finance users, but really the broader public. at the end of the day, our mission of bringing private markets to the public, it really hinges on a few macro trends.

Trend number one. Companies are staying private longer. I think we're seeing this every single day. you said it earlier, there's fewer IPOs than there have been even pre pandemic, we're actually at a 45, almost 50 year low in the number of publicly listed companies available. And so if you're investing in a, even if you're investing in the market, really you're investing in the max seven, driving most of the performance, and therefore driving most of the volatility.

[00:36:47] Chris Versace: Yeah, I'm not so sure that's the case these days, but, okay.

[00:36:53] Atish Davda: the, what, we like to bring, to, to the investor's menu is yes, you can invest in public companies and there are many public companies. And if you're actually able to construct diversified portfolios, there's plenty of risk adjusted returns to get, especially if you work with a financial advisor.

yeah. Can people do this? Absolutely. Is it easy to do it? No. I think that's the thing that I wanna I identify is that right now, due to a lack of awareness, lack of historical accessibility, there is an illiquidity premium that's available. There's greater risk adjusted returns that are available in this asset class.

That's not the early stage venture investing. It's this pre IPO investing, it's this investing in companies that are on a path towards IPO, not yet having gone public. and the partnership with Yahoo Finance really allowed us to bring the awareness of the category really, to, again, just tens of millions of households, which we're very excited about.

 

[00:37:55] Chris Versace: All right. One last question and then we'll get outta here. we danced around it. We didn't really talk about it, but we're going to now Atish, the IPO market is obviously very important to you guys. Yeah. we have seen Core Weave recently went out and, there's some, I won't say issues with that, but the pricing wasn't really what everybody thought.

We've seen a couple deals get pulled or police postponed Klarna chime, StubHub, What are you guys watching to see that the market is not just gonna open, but can be open on a sustained basis?

[00:38:31] Atish Davda: Yeah, you're spot on. Our business does have a correlation with IPOs out there. but if, if you think about it this way, as a middleman of private market trading, middleman typically benefit from volatility.

And In, in, in the same way that it's true in public markets and private markets, here's what happens. If the public markets are going down in the IPO market, the IPO window is closing. The sellers, as I was saying earlier, come in and say, maybe I should take a few chips off the table, rather than just holding everything, for later.

And so the price comes down, but the sellers come in. and if the IPO markets, the IPO windows open and the market's flying, the public market's flying, you have the demand side saying, you know what? There seems to be greater appetite for me to continue building on the momentum as the company goes public.

So the demand side comes out. And so almost regardless of what the IPO dynamic is, either the sellers come down or the buyers come out, is what we've noticed historically. You're right about one thing in terms of IPOs. I'll actually expand it and say deal activity. Now, whether it's financing of a private company, it can be a up round, down, round, sideways, round.

If there is a tension on a company, if there is, an investment going into the company. Again, because these are institutional names, household names that are doing the diligence and writing big checks into these firms, a sideways, round when the rest of the market is cratering is actually a positive sign.

Look, I started my career in 2008. And I had this distinct memory of celebrating, I, used to work at a Kwan hedge fund. I remember celebrating, when we had a negative 5% return year. Sounds crazy, right? Yeah. It goes against everything I ever learned about high water marks and how hedge funds work, et cetera.

But guess what? It was 2008 and the rest of the market was down 30%. And because we were, systematic trading strategy and only delivered negative 5% return, we, followed through on what we said we would do, which is give you. Uncorrelated systematic returns. And in many ways, private companies benefit from this because anytime you have an investment come into a private company, a professional institutional, large check writer has done diligence, and by the way, their fiduciary to their LPs.

And that gives confidence to participants in the market saying, okay, I, think I have an idea, a better idea of, this being actually a fair value for my needs in this trade.

[00:41:06] Chris Versace: So thoughts on how and when the IPO market opens?

[00:41:11] Atish Davda: I think, your guess is as good as mine. okay. I think the last four days, five days of trading have been, if there's anything they've taught us as this, in the last 25 years, the s and p has had 10 or no, 14 intra year drawdowns of 10% or more.

Yep. these things are more common than we like to believe. And as long as we can, hold the step ship steady, I think most of us will be, all right. I don't know when the IPO market will open, but I'll, tell you this. we are eagerly awaiting just a calm in the market, let alone, the IPO window cracking open.

'cause I think one will follow the other.

[00:41:52] Chris Versace: I think that gets back to Lindsey's opening comment time in the market.

alright, thanks Atish. We really appreciate you stopping by and chatting with us on this. perhaps when the IPO market, opens up, extends and some of these private deals are going public, we can, revisit with you.

[00:42:12] Atish Davda: That sounds great. Thanks for having me everyone.

[00:42:14] Chris Versace: Thanks Atish.

[00:42:15] Lindsey Bell: Thanks Atish. 

[00:42:18] Chris Versace: Wow. I gotta tell you, Lindsey, that was a different kind of conversation with us. really drilling into something that I have to be honest. I'm, I pay attention to private companies in so much as what's queuing up for the investment banks and IPOs. But I, think the conversation really, Threw a light on some of the opportunities that are there that perhaps everyday investors need to contemplate.

[00:42:43] Lindsey Bell: Yeah, no, I think it, it was really very interesting because there's a couple different companies that do this, and I mentioned it, that, you can inve invest in private companies for very small amounts nowadays, depending on which, marketplace organization you're using.

But I, I found the EquityZen approach really interesting because they really do their homework and they're looking for companies that are, what did he call 'em? Teenagers. They're not these like seed level, like year one. Year two, just getting started out and looking for money so that they can grow.

so they really have a proven business model and they're close to exiting. And that's another like key characteristic that they look for from on the EquityZen side is companies that are, he said two to three years from an IPO or whatever type of exit. so they do the homework for you before you get on.

And I'm not trying to do a sales pitch here, but it's just an interesting, differentiated way to. Maybe diversify your portfolio right.

[00:43:41] Chris Versace: Yeah, I think you're right. I, although I, what stood out to me was, and I wasn't aware of this, we were heading into the conversation, but the basket like approach that they can offer to folks as well, right?

So if I, from a thematic perspective, if I want, I think Atish talked about cybersecurity or ai, those are some obvious ones, but there might be some other baskets in there that, boy, I'm reading a lot about this. I want some exposure to it. but I don't want to take the risk on any one company.

And I, I think that. It that really is, a novel approach in my opinion, and it's one that gives you all the benefits with a lot less risk.

[00:44:17] Lindsey Bell: No, it's totally true. It their names out there that just aren't as mainstream as some of the other ones that are more likely to get more money because everybody knows who they are.

And so this gives those companies the opportunity and it helps them innovate and us become a better, stronger, technologically advanced economy,

[00:44:39] Chris Versace: It gives us a lot more companies to talk about. That's for sure. all any closing thoughts, Lindsey, before we get outta here?

[00:44:46] Lindsey Bell: No, just a very interesting conversation and a nice to take a break from talking about tariffs and volatility.

[00:44:54] Chris Versace: Well said Lindsey. said. by the way, I get an extra break 'cause I won't be here next week. You are gonna be chatting with our good friend JD Durkin next week, and I'm sure you guys gonna have a great conversation. I'm hoping that he he brings his, political insights to the conversation.

So maybe he'll be talking a lot more about tariffs, Lindsey.

[00:45:14] Lindsey Bell: Yeah, it's gonna be a good one for sure. So tune in next week. We'll miss you. But, JD is awesome.

[00:45:20] Chris Versace: He is awesome and I will be back, before too long. Don't you worry folks. Between now and then, if you need to get a hold of Lindsey, need to look at anything that she's thinking about sharing your insights, Clearnomics and LinkedIn are the place to be. For me,

march on over to the Street Pro Portfolio, I'll see you there. Thanks for listening.