Collective provides a private exchange fund that lets employees of pre‑IPO companies swap their illiquid shares or options for diversified fund interests. The exchange is tax‑free, reducing capital‑gains exposure while preserving upside potential. Investors also gain liquidity through fund redemptions, buy‑backs, or partner‑bank loans.
Funding
$15M raised to dateRaised to date based on public sources. This may differ from the amount the company actually raised and is based only on what is publicly available on the internet.
Founders
Product
Problem
Shareholders of unicorn companies often have a significant portion of their wealth tied up in a single, illiquid asset, making diversification challenging. Traditional stock sales can trigger substantial tax liabilities, reducing the net proceeds available for reinvestment.
Solution
Collective Liquidity offers a tax-advantaged Exchange Fund that enables unicorn shareholders to diversify their holdings into a portfolio of leading private companies. Shareholders exchange their shares tax-free into the Exchange Fund, gaining exposure to a diversified portfolio of venture-backed companies. They can then access immediate liquidity through a non-recourse Exchange Loan, receiving cash while retaining potential upside from the fund's performance. This approach reduces risk by diversifying holdings and provides liquidity without triggering immediate capital gains taxes.
Target Audience
The primary target audience includes shareholders and option holders of late-stage, venture-backed unicorn companies seeking to diversify their holdings and access liquidity without incurring significant tax liabilities.
Features
- Tax-free exchange of unicorn shares into a diversified portfolio of late-stage private companies
- Non-recourse Exchange Loans provide immediate liquidity without triggering a taxable event
- Proprietary algorithm for determining bids on private company shares
- Access to wealth management solutions typically used by sophisticated investors
- Risk reduction through diversification of concentrated equity positions