EquityZen, an online marketplace for investing in pre-IPO private companies, has seen a significant uptick in family offices using its platform. Family office buying activity on EquityZen increased 121% in 2023 compared with the platform’s prior three years, from 2020 to 2022.
More than 450 private companies have been listed on EquityZen — including Spotify, Docusign, Instacart and Reddit before they eventually went public. Shares available on Equity Zen are offered as secondary transactions from employees who own stock in private companies.
“Family offices realize that they can build a venturelike portfolio by buying individual companies rather than having to pay two-and-twenty [fee] to a venture capital firm or paying even more than that in some fund-to-fund structure,” EquityZen co-founder and chief strategy officer Phil Haslett told Crain Currency. “It also might be a way to have a more curated portfolio than, say, if they wrote a check to Andreessen Horowitz, they'd get 120 companies and might agree with 15 out of 120. It seems like family offices are getting more comfortable being able to do the due diligence on making one-off company investments.”
Haslett also attributes EquityZen’s family office surge to broader increases in alternative investments, which include vehicles such as hedge funds, private equity, real estate and private debt. A Preqin study this year found that 57% of family offices in North America were invested in alternative assets.
Share checks on EquityZen typically range from $500,000 to $1 million. More than 650,000 subscribers use EquityZen, and the company charges sellers a 5% fee on transactions.
“That probably also leads into why we're seeing some more activity from family offices — historically, to invest in the next Amazon or Uber, you might have had to write a $5 [million] or $10 [million] or $20 million check,” Haslett said. “But we've been able to kind of lower that bar, that minimum for people to enter.”