Are companies like EquityZen legitimate and useful?
Full disclosure: I’m an intern for EquityZen, so I’m familiar with this space but can speak with the most accuracy about EquityZen. Observations about other players in the space are my own. The employee liquidity landscape is evolving. EquityZen and Equidate help shareholders (employees, ex-employees, etc.) in private companies get liquidity for shares they already own. ESOFund and 137 Ventures help with option financing, and provide loans (and exotic structures on loans) to cover costs of exercising options and any associated tax hit. EquityZen is a private company marketplace that led the second wave of VC-backed secondary markets starting early 2013. The mission is to help achieve liquidity for employees and other private company shareholder, but in a company-approved way. EquityZen transacts with share transfers and also a proprietary derivative structure which transfers economics of a company's shares without changing voting and information rights. This structure typically makes the transfer process cheaper and faster as less paperwork is involved. Accredited investors find the process appealing because they get access to companies they usually cannot with small check sizes. To address the questions in Dzt's post: 1). EquityZen doesn't take a 'loan shark' approach meaning they don't front shareholders money so that they can purchase their stock. With EquityZen, you’re either selling your shares or selling all the economic risk—upside and downside—in exchange for today’s value. 2). EquityZen only allows company approved deals on the platform. As a result, companies are more friendly towards the process and they tend to allow these deals to take place. Non-company approved deals pose risks for buyers and sellers and are ultimately unsustainable. As a buyer, without company blessing, you’re taking on significant counterparty risk from the seller (will they make good on their promise to deliver shares in the future?) or the risk that the transfer is impermissible under relevant restrictions and your purchase is invalid. As a seller, you’re running the risk of violating your equity agreements, which can have severe penalties, like forfeiture of your stock. Your shares are also much less marketable when you’re looking to transact without the company’s knowledge or approval. 3). Terms don't change depending an a shareholder's situation. EquityZen is a professional company and values all of the shareholders that use the platform. It’s a marketplace so the market sets the price. In other situations, you may be at the mercy of just one large buyer. This can happen when you’re facing a big tax bill on exercise but don’t have the cash (because you have the stock). 4). EquityZen doesn't offer loans so this is a non issue. 5). Not EquityZen! EquityZen creates a clean break from the economics. It’s not uncommon for the loan structures to use an interest component as well as some other complications, like upside participation and and also a liquidation preference. EquityZen strives for a simple structure where you’re not on the hook for the downside and you’ve transferred all the upside as well. Stuff I wish I had known, based on having done the following: Obtained employment at a startup that grants Incentive Stock Options (ISOs);  Early-exercised a portion of my options when fair market value was very close to my strike price to minimize AMT; made a section 83b) election and paid my AMT up front for that tax year. All this (the exercise and the AMT) was done out of pocket. I've never see EquityZen or Equidate mention anything about loans for your exercise. My understanding is they help you sell your shares once you actually own them. Stayed at said startup long enough to have my exercised portion of these ISOs vest and count as long term capital gains;  Tried to sell them on both EquityZen and Equidate with no success, due to not meeting their transaction minimums.  Initial contact with EquityZen was very friendly and helpful, and I even got a notice about a potential sale, but then they hired an intern to answer emails and I remember his responses being particularly dismissive, as if I was wasting their time by trying to sell such a small amount of stock. So that didn't go anywhere. Equidate was a little more friendly and was open to the option of pooling shares with other employees to make a sale in order to meet their minimum, but that never happened either.  My advice, if you're thinking about exercising and you're worried about liquidity on the secondary markets, would be to find out what the minimums would be for your specific company on these platforms before you plunk any cash down. Eventually brought my request for liquidity back to the company who helped connect me with an interested external buyer, and we completed the transaction that way. As for employer approval - there's really no reason or basis that your company wouldn't allow it (if you paid to exercise then the shares are yours to sell, though the company may have a right of first refusal). It's not really in the company's best interest to have their shares be illiquid on the secondary markets, since that sends a bad signal to potential investors and future employees.
Partnerships don’t work out unless you clearly define the roles and relationships, hence why most partnerships fail (I usually cringe when I hear partnerships). Also a background check never hurts (think citizenship ID cards). Having a good lawyer helps as well.  I think demonizing an entire country/ethnicity for the failure of your partnership is misguided, but that’s usually how our thinking defaults to when we’re stressed like this. Being emotional is not a trait of good business acumen. Would it make you feel better if you were being lied to by Brits,Indians,Israelis,Nigerians,etc?   You having lived in China for over 10 years should have taught you that there is a get rich quick mentality over there. Hopefully you didn’t put too much money into this venture. I would definitely look into what they are doing in China. Are they break any laws over there? Is your business in compliance with import/export controls in China &amp; US? Is this business relationship still salvageable or should you just walk away?  Most people are not cut out for starting their own business. You might also need to support your wife in the infant stages of this enterprise or hire someone as her assistant. Looks like you have A LOT of work/discussing/brainstorming/debating with your wife before you even get into it with the partners. "they make their money by serving weight loss ads and selling virtual coins so people can ""win"" at farmville. their business model is virtually absolutely dependent on the grace and prosperity of Facebook. its a bubble, and it shouldn't surprise anyone.  the fact that society considers what zynga does as valuable is almost in and of itself an argument that modern capitalism is rotten. i don't consider them industrialists, this overvalued IPO is a scam based on a fad supporting lowest common denominator advertising." "I think you're right that these sites look so unprofessional that they aren't likely to be legitimate. However, even a very legitimate-looking site might be a fake designed to separate you from your money.  There is an entire underground industry devoted to this kind of fakery and some of them are adept at what they do.  So how can you tell? One place that you can consult is FINRA's BrokerCheck online service.  This might be the first of many checks you should undertake. Who is FINRA, you might ask?  ""The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States."" See here. My unprofessional guess is, even if a firm's line of business is to broker deals in private company shares, that if they're located in the U.S. or else dealing in U.S. securities then they'd still need to be registered with FINRA – note the ""all securities firms"" above. I was able to search BrokerCheck and find SecondMarket (the firm @duffbeer703 mentioned) listed as ""Active"" in the FINRA database. The entry also provides some information about the firm.  For instance, SecondMarket appears to also be registered with the S.E.C.. You should also note that SecondMarket links back to these authorities (refer to the footer of their site): ""Member FINRA | MSRB | SIPC.  Registered with the SEC as an alternative trading system for trading in private company shares.  SEC 606 Info [...]"" Any legitimate broker would want you to look them up with the authorities if you're unsure about their legitimacy. However, to undertake any such kind of deal, I'd still suggest more due diligence.  An accredited investor with serious money to invest ought to, if they are not already experts themselves on these things, hire a professional who is expert to provide counsel, help navigate the system, and avoid the frauds." The Motley Fool is generally regarded as relatively legit, at least in that they're not likely to do anything outright fraudulent and they definitely have reasonably in-depth content to provide you.  The Motley Fool makes a fair amount of money off the subscriptions, though, and they do hawk them quite violently. If I didn't have a generally good opinion of them to begin with, I'd have been completely put off as well. It's pretty shameful. I don't think it's worth hundreds of dollars a year, but then again, I don't look at investing as a second career like the Fool likes to suggest, either. "Not to detract from the other answers at all (which are each excellent and useful in their own right), but here's my interpretation of the ideas: Equity is the answer to the question ""Where is the value of the company coming from?""  This might include owner stakes, shareholder stock investments, or outside investments.  In the current moment, it can also be defined as ""Equity = X + Current Income - Current Expenses"" (I'll come back to X). This fits into the standard accounting model of ""Assets - Liabilities = Value (Equity)"", where Assets includes not only bank accounts, but also warehouse inventory, raw materials, etc.; Liabilities are debts, loans, shortfalls in inventory, etc.  Both are abstract categories, whereas Income and Expense are hard dollar amounts.  At the end of the year when the books balance, they should all equal out. Equity up until this point has been an abstract concept, and it's not an account in the traditional (gnucash) sense.  However, it's common practice for businesses to close the books once a year, and to consolidate outstanding balances.  When this happens, Equity ceases to be abstract and becomes a hard value: ""How much is the company worth at this moment?"", which has a definite, numeric value. When the books are opened fresh for a new business year, the Current Income and Current Expense amounts are zeroed out.  In this situation, in order for the big equation to equal out: Assets - Liabilities = X + Income - Expeneses the previous net value of the company must be accounted for.  This is where X comes in, the starting (previous year's) equity.  This allows the Assets and Liabilities to be non-zero, while the (current) Income and Expenses are both still zeroed out.  The account which represents X in gnucash is called ""Equity"", and encompasses not only initial investments, but also the net increase & decreases from previous years.  While the name would more accurately be called ""Starting Equity"", the only problem caused by the naming convention is the confusion of the concept Equity (X + Income - Expenses) with the account X, named ""Equity""." You may want to dive into the various scandals and further hefty settlements between blue chip brands and agency networks here. Ask around if Dentsu Aegie finances enjoyed being honest to their clients as to where the money was going and what kind of online advertising was actually in place, just to name a specific example.  Of course online ads find positive outcomes for lots of businesses. You don’t expect any less when you see Google revenues to be honest. It still doesn’t mean that the whole tracking and private information dragging framework isn’t wrong or that so many web experiences aren’t soiled by intrusive and nasty ads. Braeburn is no more a hedge fund than any other off-shore entities corporations create to manage taxes creatively. All of the major corporate entities in the world do the same thing. Apple isn't even very good at it comparatively. I don't know if this is exactly what you're looking for but Seedrs sorta fits what you're looking for. Private companies can raise money through funding rounds on Seedrs website. It wouldn't necessarily be local companies though. I've only recently found it myself so not sure if it has a uk or European slant to it. Personally I think it's a very interesting concept, private equity through crowd funding. I can't provide a list, but when I took out my Stocks and Shares, I extensively researched for a good, cheap, flexible option and I went with FoolShareDealing.  I've found them to be good, and their online trading system works well.  I hope that's still the case. It seems also on some international markets this is allowed. http://www.businessinsider.com/li-hejun-shorting-hanergy-2015-5 My current strategy is long equity in blue chips with limited growth but large profits... Some call that value investing.  GM, AAPL, BRK.B have done very well for me. VZ is a notable straggler. Regardless, my overall positions have grown considerably :)  Not a fan of shorting... but TSLA would be my short of choice since it is very expensive to short SHLD. I find this pretty sketchy, personally.   From their investor opportunities page:  &gt; Wall Street, Social Medias and Real-estate investments aren’t working for many investors.  Stocks in the beleaguered social media sector keep heading down.  Shares of FaceBook, Angie’s List and Groupon, etc. have plunged as investors continue their retreat from the formerly red-hot sector. In this present day economy investors are looking for the next early stage Apple.  LifeSaver is the answer.  Reads as way too much of a sales pitch to invest. Also, I don't think there is actually any way to invest in the company outlined on that page.  I'm not saying this isn't a good idea for a product, I just would expect a medical device company to have a somewhat more professional website/investor relations page, and i'm slightly surprised to see you post this, especially with this title. "You may want to look into robo-investors like Wealthfront and Betterment. There are many others, just search for ""robo investor""." "This is definitely a scam. My husband was inquiring with a ""company"" that was offering him to be. Representative for them. He got the same job details but the company was called Ceneo. I did due diligence and found that the real Ceneo has no problems receiving money directly from buyers around the world. The fake company mirrored their website, posted jobs on the net,hoping to ""employ"" unsuspecting people in the U.S. This is their reply to my husband when he asked the job details. DO NOT GET SCAMMED and held accountable for money laundering." "Well, this sub is generally pretty darn good. Among us are investment bankers, private equity analysts, valuation analysts, portfolio managers, traders, brokers, bachelors, masters, and doctorate students, etc. We're helpful, though sometimes snarky, and have an exceedingly low tolerance for bullshit.  I love it here.  And while your logic is sound, we can actually explore private equity directly, as while private and public equity are related, they are different enough to study separately, in my opinion.  Private equity deals with private companies. By definition, these investments are illiquid (they cannot be easily sold like public stocks), and unmarketable (there is no ready market to trade these investments, like stock). They are generally held for longer time periods.  At its earliest stage, private equity is synonymous with ""initial investment"" or ""seed funding."" This includes (if we are maybe slightly liberal with our definition), the initial investment an entrepreneur makes into his business. At this stage, friends and family, angel investors and venture capital are present. At different points of a company lifecycle, different financiers become interested/applicable (mezzanine investors, etc.).  The investment made into a company allocates a certain percentage of the ownership of the company to the investor in exchange for cash (usually). This cash is used to cover expenses and take on capital projects. The goal of these investments is to directly make the company (and its value, and thus the investor's value) grow.   At some points in time, a new investor will show up and either invest directly in the company (same as before) or buy another investor's holding in the company (in which case, cash goes to *that specific investor* and *not* the company).   At every stage of investment leading up to IPO, the deals are negotiated between the parties. The results of a given negotiation determines the value of that company's equity. For example, if I pay you $100 for 50% of your company, the company's implied worth is $200. If two days later, Joe comes and offers to buy 33% of the company for $100, the Company is worth $300. (Special note: these percentages are assumed to be the allocation of equity **after** the deal. In this last case, the ownership of your company would be 33% you, 33% me, and 33% Joe. This illustrates something called *dilution,* which is very important to investors as it effects their eventual potential payoff later down the road, along with some other things).   At this point, do you have any questions?"