FAQ

Collective Liquidity is an online platform enabling many unicorn (valuation $1bn+) shareholders to easily obtain liquidity and reduce their risk from being over concentrated in a single stock in a tax efficient manner.

The Collective Liquidity team is comprised of the founders, executives, and board members of pioneering private market platforms SharesPost, Forge and Nasdaq Private Market. We leverage that experience to create dramatically better liquidity and risk management solutions for unicorns and their employees.

The Collective Exchange Fund is a portfolio of the world’s leading unicorns diversified across technology sectors. Employees and shareholders in these companies can exchange their shares tax free for a partnership interest in the Exchange Fund of equal value. The resulting diversification (i.e., holding an interest in many unicorns rather than just one) can reduce the exchanger’s financial risk. After the first year, exchangers can redeem their interest in the Exchange Fund for cash at the end of any quarter. Learn more about the Exchange Fund here.

We recommend that unicorn employees compare their different liquidity alternatives based on their long-term, after-tax proceeds. The amount you pay in taxes will depend on many details (e.g., are your options NSO or ISOs, your state’s income tax rates, how long you have held your shares, etc.). Consult with your tax professional to review your tax circumstances. For many unicorn employees though, an LP BuyBack can offer more immediate after-tax cash than a stock sale plus they retain long term upside from their partnership interest in the Exchange Fund. Our Liquidity Estimator can give you an immediate estimate of your potential after tax proceeds from an LP BuyBack vs a stock sale or you can schedule a call with us and we will review your situation in detail.

Each Collective Exchange Fund’s limited partner has access to a personalized dashboard that shows the value of the limited partner’s capital account and changes in the Fund’s net asset value in real time. The Fund also regularly sends limited partners performance updates and news about its portfolio companies.

After an initial 3-year holding period, investors may withdraw all or a portion of their Exchange Fund capital account in cash. There are no fees or charges for withdrawals. The fund's withdrawal obligations in any given quarter are limited to 4% of its assets under management. For more information see also "What to know before redeeming your Collective LP interest".

The Collective Exchange Fund charges U.S. exchangers a 1.75% annual management fee and a 15% performance fee. See details about the Fund here and/or view the Fund’s Private Placement Memorandum.

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.

Exchanges into the Collective Exchange Fund can be initiated anytime instantly from the Collective Liquidity website or by speaking with a Collective Liquidity representative. Once initiated, we typically take a couple of days to confirm some details (e.g., you own the options or shares, you are an accredited investor, etc.) before submitting the transaction to your company. Companies then usually take 30 days to process the transaction. Once the exchange is complete, you can immediately borrow against your partnership interest. LP BuyBacks are typically funded on the 1st day of the following month after completing the online forms.

Yes – only shares (not stock options) can be exchanged into the Exchange Fund. If you need help exercising your options, contact us at support@collectiveliquidity.com.

An exchange into the Fund involves the issuance to you of a limited partnership interest in the Fund. This partnership interest is a restricted security and one of the requirements under U.S. securities laws is that holders of restricted securities are “accredited investors.” You can qualify as an accredited investor either by meeting certain income or net worth criteria.