Equitybee platform investments have demonstrated strong capital returns across varied market conditions, historically outperforming top-decile VC funds in five of the last six vintage years (2018-2023). Despite a challenging distribution environment, Equitybee’s unique platform has enabled above-market DPI performance, providing investors with reliable returns.
This table and the chart below showcase Equitybee’s Platform Investments ability to consistently return capital to investors in spite of the recent unprecedented distribution drought across the venture capital landscape.
Specifically, Equitybee’s platform investments net distributions to investors (as measured by DPI) have outperformed those of top-decile venture capital funds in all but one vintage year between 2018-2023.
These results highlight the effectiveness of Equitybee’s platform in providing access to pre-IPO opportunities at earlier valuations, allowing investors the opportunity to achieve substantial early liquidity by supporting employees in exercising their stock options.
All data shown is Distributions to Paid-In Capital. Top Decile, Top Quartile and Median VC data sourced from Pitchbook.
*Past performance is not indicative of future results. Equitybee s DPI is defined as Total Net Investor Distributions divided by Total InvestedCapital (including fees) aggregated by vintage year. This performance data does not represent any investor s portfolio or any model portfolio.
The venture capital market is currently experiencing a distribution crisis, with distributions hitting record lows. For eight consecutive quarters, distribution rates have averaged single-digit percentages of Net Asset Value (NAV), significantly below the decade average of 16.8%.
This distribution drought is largely due to a severe lack of exits, as shown by only 14 IPOs and a total exit value of $10.4 billion in Q3 2024.
Reduced Investor Activity: Investor engagement has fallen to 45.5% of 2021 levels, with only 23.1% of available capital ("dry powder") deployed last year.
Fundraising Contraction: This drought has led to two years of reduced VC fundraising, highlighting the critical role of DPI in navigating the challenging market.
Distributions to Paid-In-Capital represents the actual amount of capital that has been returned to investors relative to the amount of capital they have contributed. This is an important tool leveraged by investors when evaluating a venture capital fund's ability to return capital efficiently to its Limited Partners.
Average US VC fund distributions, from funds age five to 10 years old, as a share of beginning net asset value
Source: Pitchbook, “VC distributions sink to 14-year low”, February 9, 2024
Q1 2024 data sourced from Pitchbook-NVCA’s Venture Monitor Q3 2024 edition
Startup employees often receive stock options as part of their compensation. To convert these options into shares, employees must exercise their right to purchase these stock options, which involves significant upfront capital. Many employees cannot afford to do this, missing out on participating in the potential future success of the companies. Equitybee’s investors can provide the needed capital, allowing employees to exercise their options. In return, investors receive their initial investment, annual interest, and a percentage of the equity's value upon a successful liquidity event, such as an IPO or acquisition. This creates a mutually beneficial opportunity in a largely untapped market worth over $150 billion*.
Despite the aforementioned distribution drought from traditional US venture capital funds (mainly stemming from the lack of IPOs), Equitybee investments have continued to generate liquidity from a myriad of liquidity event types. This well-balanced mix means that Equitybee investors don’t need to rely on a hot IPO market to receive distributions. Additionally, tender offers (Equitybee’s historically highest performing liquidity event type) are a mostly unique exit route tied to the funding of employee stock options, which typically traditional VCs don’t have access to. Specifically, tender offers & secondaries liquidity events through Equitybee investments have delivered a 2.81x net multiple on invested capital in just under 2 years on average.
*Multiple on Invested Capital (MOIC) is calculated as the net proceeds distributed to investors divided by their original investment. In the Equitybee model, net proceeds typically comprise the original principal, accrued annual interest (ranging from 3% to 5%), and the investor’s share of the equity value at the liquidity event (typically 20% to 45% of the funded shares). A 5% carried interest is applied to the accrued interest and the equity value share at distribution.
**Time to liquidity Indicates average time from investment date to distribution date, sourced from Equitybee’s proprietary data
Past performance is not indicative of future results. Private placements are speculative, illiquid, contain substantial risk and may result in the complete loss of capital to the investor. Consult your tax accountant as there may be tax considerations on profit amounts. Results may vary with each use and over time. Investor proceeds may be settled in cash or shares.
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*Multiple on Invested Capital (MOIC) is calculated as the net proceeds distributed to investors divided by their original investment. In the Equitybee model, net proceeds typically comprise the original principal, accrued annual interest (ranging from 3% to 5%), and the investor’s share of the equity value at the liquidity event (typically 20% to 45% of the funded shares). A 5% carried interest is applied to the accrued interest and the equity value share at distribution.
Past performance is not indicative of future results. Private placements are speculative, illiquid, contain substantial risk and may result in the complete loss of capital to the investor. Consult your tax accountant as there may be tax considerations on profit amounts. Results may vary with each use and over time. Investor proceeds may be settled in cash or shares.