Yes. Once you hold an interest in the Collective Late-Stage Exchange Fund, and you are interested in liquidity, Collective will buyback some of your partnership interest for cash – up to 50% of its value. And when the time is right for you, redeem your partnership interest in the fund for additional cash.
For example, If you hold $100,000 worth of shares in a company eligible for exchange, you can swap your shares for a $100,000 partnership interest in the fund tax-free. This diversifies your holdings and so reduces your risk. In our example, if you need liquidity, Collective will immediately pay you $50,000 to purchase part of your partnership interest. Some of your partnership interest ($12,500) transfers immediately and some of it transfers 30 months later. How much of your partnership transfers then depends on how much the fund appreciates over the 30 months, but you retain up to 90% of the growth in your partnership interest’s value. Finally, 30-months later, if your partnership interest has appreciated and is now worth $125,000, you'll transfer $65,000 to settle your LP Buyback, leaving you with a partnership interest worth an additional $35,000. The total value to you would be $85,000 (the $50,000 in upfront cash plus the $35,000 in your remaining partnership interest). This is substantially more than you might have expected from a stock sale.
Please note, that if the shares being exchanged originated from the exercise of Incentive Stock Options (ISOs), you may owe some tax on the disqualifying disposition of your ISO shares if you have not met the ISO holding period requirements. The tax from the disqualifying disposition is often significantly less tax compared to the tax from a sale of your ISO shares. Consult with your tax professional to review your tax circumstances.