Good for your employees,
great for your company
Collective works side by side with the best private growth companies to make their equity compensation programs the basis of stable, long-term wealth creation for their employees
Enhance Recruitment and Retention
- Increase the value of equity compensation by providing controlled, turnkey liquidity
- Enable tax optimized diversification to reduce employee risk from over-concentration
- Deliver better long-term financial outcomes for employees
Eliminate Issues Posed by Other Solutions
- Provide employee liquidity without accepting many retail investors on to the cap table
- Avoid legal complexity, disclosures and expense of tender offer programs
- Enable employees to generate liquidity by selling up to 50% of their capital interest back to the Fund
Gain a Value Added, Long-term Investor
- Collective is a long-term institutional investor
- The Collective Exchange Fund is overseen by experienced venture capitalists
- Collective is passive shareholder that seeks to support management
What is Collective Liquidity?
Collective Liquidity provides unicorn employees with the financial tools they need to turn their company's equity compensation into a prudent, long-term financial plan. Collective does this first by enabling employees to exchange shares tax-free for an interest in the Collective Exchange Fund, a diversified portfolio of leading venture-backed companies. They can then choose to obtain liquidity by borrowing non-recourse against their fund interest. As compared to a stock sale, the results for employees can be more after-tax liquidity in the near term and long-term appreciation with less financial risk over the long-term.
What is the Collective Exchange Fund?
Exchange funds generally allow investors to exchange a single stock for an interest in a diversified pool without triggering capital gains taxes. They have been available for public shares for decades. Collective Liquidity is the first to make this proven diversification and tax optimization strategy available to employees of private companies.
The Collective Exchange Fund aims to represent the late-stage venture asset category by applying a long-term, passive approach to a broadly diversified portfolio of unicorns. Collective only accepts exchanges from leading unicorns backed by many of the best VCs into its portfolio. Prospective exchangers can learn exactly which companies are eligible for exchange by viewing the fund's Eligible Companies.
Talk to a Collective Liquidity representative
Learn more about how Collective Liquidity works with private growth companies
What is an LP BuyBack?
To provide exchanging shareholders with liquidity, Collective will buy back part of their Exchange Fund limited partnership interest for cash. The sale is structured as a variable prepaid forward. This means that they receive the payment - up to 50% of the value of their limited partnership interest - upfront but the transfer of the partnership interest happens 30 months later. The exact amount of the partnership interest transferred varies based on the performance of the Exchange Fund.
Because the exchange into the fund is tax free and the great majority of the LP BuyBack proceeds are not taxed until the transaction is settled in the future, many employees can generate more immediate after-tax liquidity from an LP BuyBack than they might obtain from a stock sale. Even better, the employee also retains most of their Exchange Fund limited partnership interest which can be expected to appreciate at long-term venture capital rates.
Why is Collective Liquidity good for private growth companies?
The Collective Exchange Fund is a passive, long-term investor managed by experienced venture capitalists. Collective consolidates a company's cap table by aggregating many smaller shareholders into a single institutional holder. As a long-term partner to our portfolio companies, we continually strive to be of service by delivering risk management and liquidity solutions that enhance the value of the company's equity compensation plans. Our experienced staff ensures that Collective's solutions are a turnkey employee benefit and conform to all company policies and procedures.
Why is Collective Liquidity a better liquidity provider than other solutions?
Unlike tender offer programs, Collective enables companies to avoid:
- Creating and managing complex liquidity programs
- Raising capital and making financial disclosures to fund employee liquidity
- Paying fees to tender offer platforms
Unlike marketplaces, Collective enables companies to avoid:
- Fragmenting their cap table with many unknown retail buyers
- Impacting 409A valuations (because exchanges are distinguishable from secondary transactions for valuation purposes)
Unlike lenders, Collective Liquidity enables companies to avoid:
- Letting their employees borrow at high cost
- Letting their employees remain over concentrated in a single stock
- Having to manage lenders' security interests on company shares
Our Target Portfolio
Collective seeks to partner with leading unicorns
