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By Kyle Anthony, Benzinga
Though Airbnb (NASDAQ: ABNB), Meta Platforms (NASDAQ: META), and Uber (NYSE: UBER) are industry-leading firms with strong consumer brands, their success did not start when they became publicly traded firms but began when they were private entities, backed by private capital. While Initial Public Offerings (IPOs) are viewed as a seminal moment in a company’s history, investors who had pre-IPO ownerships of these companies garnered significant wealth from them before their public listing, and a recent study showed that private companies are 50% more profitable than public companies. Furthermore, according to private equity manager Bain & Company, "public assets have historically commanded "higher average valuations" than private companies.
With more individuals becoming aware of this occurrence, there is a growing interest and desire to engage in private investing.
Linqto, a San Jose, California-based firm, recognizes this trend and believes more individuals should be able to access private market opportunities. The company’s mission is to democratize private investing by making it accessible, affordable and liquid for individual investors.
Here’s why Linqto may be the ideal platform for individuals considering or seeking out private investments.
What Is Linqto’s Overarching Purpose?
Linqto's vision is to democratize private investing by making it accessible, affordable, and liquid for individual investors. These attributes are central to Linqto’s platform, empowering investors to engage with private markets meaningfully. Linqto promises to deliver:
An inclusive, easy-to-use, secure and fast digital experience on its platform.
Private investments at an affordable price: The minimum order is $2500, with subsequent investment amounts being $5,000, and there are no hidden costs. This compares to competitor Charles Schwab’s (NYSE: SCHW) recent announcement that it would launch a self-directed alternative investments platform for qualified individual investors with assets of more than $5 million. Though firms such as Forge Global Holdings (NYSE: FRGE), EquityZen and HIIVE facilitate pre-IPO investing, Linqto says its fee structure is more advantageous to retail investors, especially given that historically such opportunities have required a minimum investment amount of $100,000.
Liquidity by maintaining significant holdings for shares of companies on their platform: These shares are sourced from founders, employees and investors at a negotiated price.
How Does Linqto Select Investments For Its Platform?
Linqto primarily invests in mid to late-stage private companies in the technology industry. Selected firms must generate a minimum revenue amount and have institutional venture capital or private equity investor backing.
Leveraging its in-house research expertise and evaluation capabilities, Linqto conducts in-depth due diligence on the firms it includes on its platform as it invests alongside its investors. By investing first and ensuring that Linqto has skin in the game, the firm can streamline the investment process, making it as easy as pointing and clicking to participate in the investment opportunities presented on the platform.
Liqnto’s executive leadership team comprises individuals with deep and extensive expertise in venture capital, technology, corporate strategy and innovation, among other specialties. The broader organization reflects various disciplines and professional experiences, collaborating to enhance the platform’s offering and user experience continually.
What Are Investors Receiving When They Purchase Shares On Linqto’s Platform?
When an investment is made on Linqto’s platform, investors receive the equivalent number of shares in a Special Purpose Vehicle (SPV) managed by Linqto but owned by the investors. The investors are protected against creditors in the event of bankruptcy.
The benefit of this approach is that when private equity is sold, the company has the right to refuse that sale. By selling a representation of shares that Linqto owns, it can guarantee an immediate sale to investors without the company having the right to refuse that sale. Furthermore, the SPV structure allows only one investor, Linqto, on the company's cap table, which is desirable to the company as they want to minimize the number of investors on their cap table for funding and regulatory reasons.
Is There A Holding Period For Shares Purchased?
Linqto has a 90-day holding period. From the date of purchase, members must hold the asset for 90 days before selling and cannot use those shares to purchase another security on the platform.
Is Linqto A Financially Regulated Platform?
Linqto is a broker/dealer registered with the Securities and Exchange Commission (SEC) and a Financial Industry Regulatory Authority (FINRA) member. The firm also has Alternative Trading System licenses, making it a go-to legal and compliant platform for investors. An ATS is a regulated platform enabling securities trading outside traditional stock exchanges. It allows investors to buy and sell shares in private emerging unicorn companies more quickly and efficiently.
A New Avenue For Wealth Generation
As demand for private investments grows, Linqto’s platform can help investors broaden their investment opportunities in a turnkey manner. With many companies remaining private for longer, Linqto’s platform is a new avenue through which young investors can gain early, pre-IPO access to companies that could potentially be poised to be industry leaders.
To learn more and begin investing with Linqto, click here!
Featured photo by Joshua Mayo on Unsplash.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.
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